Rhodes Scholarships Won by 5 at Stanford

By Oliver Staley - Nov 20, 2011 7:50 PM GMT+0700

Stanford University students won five Rhodes Scholarships, while Harvard, Brown and Princeton students took four each as the 32 U.S. recipients of one of the world’s most prestigious academic awards were named today.

The University of Washington had two Scholars and California State University Long Beach and Bard College had their first ever recipients, according to a statement from the Office of the American Secretary of the Rhodes Trust.

The Rhodes Scholarships were established in 1902 in the will of Cecil Rhodes, a British mine operator and explorer who founded what is now the Johannesburg-based De Beers Group. Rhodes Scholarships fund two or three years of study at the University of Oxford in the U.K. Scholars are chosen from more than 1,500 applicants.

Past winners include former U.S. President Bill Clinton, Bobby Jindal, governor of Louisiana, and Rachel Maddow, host of the similarly named MSNBC news show.

Among this year’s winners were Ronan Farrow, Bard’s youngest graduate ever at 15 in 2004, who grew up with 14 adopted siblings from seven countries speaking six languages, the Rhodes Trust said. Bard is located in Annandale-on-Hudson, New York.

This year for the fourth time since 1976, there were more female U.S. Scholars than male, 17 to 15, the Trust said.

The total value of a scholarship is about $50,000 a year, the Trust said.

Before this year, 332 students from Harvard University, in Cambridge, Massachusetts, had been named Rhodes Scholars, the most from any U.S. university.

With today’s results, 3,260 Americans representing 314 colleges and universities have received Rhodes Scholarships, the Trust said.

Scholars are nominated by their universities and finalists are interviewed. This year, Rhodes finalist Patrick Witt, a quarterback on Yale’s football team, chose not to interview because it conflicted with yesterday’s game against Harvard.

To contact the reporter on this story: Oliver Staley in New York at ostaley@bloomberg.net

To contact the editor responsible for this story: Jonathan Kaufman at jkaufman17@bloomberg.net

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Monti Must Govern Italy to 2013 to Lead Reform, Berlusconi Tells Corriere

By Elisa Martinuzzi - Nov 20, 2011 7:59 PM GMT+0700

Silvio Berlusconi, who resigned as Italy’s prime minister on Nov. 12, told Corriere della Sera that his successor Mario Monti must govern through 2013 to complete the reforms he plans to undertake.

Berlusconi isn’t setting a time limit on his successor, though he won’t back the government if, for example, it seeks to introduce a wealth tax, he told the daily newspaper.

Monti, who leads the technocratic government, has told the former prime minister he won’t run in the country’s next elections, Berlusconi told the Milan-based newspaper. The People of Liberty’s candidate will be selected through primaries and “I am reasonably convinced that Angelino Alfano will win.”

“Our government had no fault,” and the crisis is a euro crisis, as shown by spreads on Italy’s debt which have remained “high” since his resignation, the newspaper reported.

Berlusconi asked the new government to push for the European Central Bank to become a lender of last resort to preserve the euro, he was cited as saying. He’s also sought a review of European Banking Authority rules which “choke” Italy’s lenders, the newspaper reported.

To contact the reporter on this story: Elisa Martinuzzi in Milan at emartinuzzi@bloomberg.net

To contact the editor responsible for this story: Dick Schumacher at dschumacher@bloomberg.net

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Ackermann Says Europe Needs Crisis ‘Firewall’

By Jiyeun Lee - Nov 20, 2011 7:28 PM GMT+0700

Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann said Europe needs a “firewall” to prevent spillover from its debt crisis and should increase the size of its rescue fund.

“We need the firewall to cope with the spillover effect, if it occurs,” Ackermann, who also chairs the Institute of International Finance, said at a conference held by the Asian Development Bank and the Institute for Global Economics in Seoul today. “The stability facility should be increased.”

The failure of European leaders to end the debt crisis with their broadest effort yet has revived a Franco-German dispute over the European Central Bank’s role and fueled investor concerns over policy makers’ economic impotence. German Chancellor Angela Merkel has rejected French calls to deploy the ECB as a crisis backstop.

French Finance Minister Francois Baroin said in a speech in Paris on Nov. 16 that “the best way to avoid contagion is to have a solid firewall” by using central bank support for Europe’s 440 billion-euro ($595 billion) rescue fund. The European Financial Stability Facility should be increased to 1 trillion to 2 trillion euros, Ackermann said today, without explaining what he meant by “firewall.”

Banks represented by the IIF reached an agreement on Oct. 26 in Brussels with European leaders to accept a 50 percent writedown in the face value of Greek government bond holdings as part of wider measures to tackle the sovereign-debt crisis. The Greek deal was part of a European plan to cut the country’s debt load, recapitalize banks and boost the region’s rescue fund to 1 trillion euros.

System Deficiencies

European governments must make clear that the deal on Greece is an exception and won’t be applied to other European countries because investor concern has worsened the situation, Ackermann said on Nov. 18. The financial crisis has exposed a number of deficiencies in the international monetary system, he said today in his speech in Seoul.

“Lack of effective discipline to avoid imbalances, excess reserve accumulation, some exchange rate misalignments” are among the deficiencies of the system, Ackermann said.

Global regulators are ordering banks to hold more capital to increase their financial strength while firms shed sovereign- debt holdings investors consider risky. Under rules written by regulators in Basel, banks will have to hold higher levels of capital and different definitions for determining the risk their portfolios carry.

‘Less Profitable’

“The profitability of the sector as a whole will be reduced, and it will negatively impact the ability of the financial sector to support the growth of the real economy,” Ackermann said today. The results of regulation “will be a financial industry that is less profitable, less dynamic, and presumably less international,” he said.

Ackermann said he is confident about Italy’s funding capacity.

“The household, private debt to GDP in Italy is only about 36 percent, so actually it’s a wealthy country. Net assets to GDP is over 200 percent,” he said. “So under the new government, I’m pretty confident, if they initiate the right measures, Italy will be able to raise funds again.”

Deutsche Bank said its risks tied to Italian debt more than doubled in the third quarter as the Frankfurt-based bank stepped up market-making, more than offsetting risk reduction in other peripheral European nations, according to a statement on Oct. 25. The risks of Germany’s biggest lender related to Italy surged to 2.25 billion euros ($3.1 billion) as of Sept. 30 from 996 million euros in the prior three-month period, the statement showed.

To contact the reporters on this story: Jiyeun Lee in Seoul at jlee1029@bloomberg.net

To contact the editor responsible for this story: Paul Tighe at ptighe@bloomberg.net

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Supercommittee Unlikely to Reach Deficit Deal

By Brian Faler and Steven Sloan - Nov 20, 2011 5:55 PM GMT+0700

A member of the congressional supercommittee expressed doubt that the panel would reach an agreement on a U.S. deficit-reduction package by its Nov. 23 deadline.

Senator Jon Kyl, an Arizona Republican, called a slimmed- down debt plan rejected this past week by Democrats a “last- ditch” effort by his party to ensure the panel is able to “at least accomplish something and not come away with a goose egg.”

It’s too late for lawmakers to send new proposals to the Congressional Budget Office to be analyzed for their impact on the deficit, he told reporters yesterday.

Kyl said his colleagues hope that “even at this late date” the committee could put together ideas that had already been analyzed by the CBO. “I think that’s pretty doubtful at this point but obviously nobody wants to quit until the stroke of midnight,” he said.

The panel has been deadlocked over income-tax increases, with Republicans pushing to permanently extend President George W. Bush’s tax cuts, as well as to make cuts in politically sensitive entitlement programs such as Medicare.

The deadline for an agreement on how to carve $1.2 trillion out of the budget is Nov. 23, though under the rules a CBO cost estimate of any final plan must be publicly available 48 hours beforehand. There was little sign of urgency yesterday in the mostly empty Capitol. Democratic members of the supercommittee did not meet, while Republicans held a conference call.

‘Not Fair’

Meanwhile, the Democratic Congressional Campaign Committee, charged with electing more Democrats to the U.S. House, fired off a fundraising appeal blasting Republicans on the supercommittee. “Republicans are insisting on eliminating the Medicare guarantee while cutting taxes for millionaires and refusing to include a robust jobs plan,” said the e-mail, which was attributed to House Minority Leader Nancy Pelosi. “That’s not fair,” she said. “Let’s seize this moment and show the world Democrats are strong and united,” she said.

Kyl said a pared back deficit-reduction proposal offered in the past week by Republicans was designed to break the stalemate by steering clear of politically sensitive programs such as Medicare and instead cut other, less controversial, types of mandatory spending.

“I thought maybe this last-ditch effort to focus just on savings that we had all pretty much agreed was possible might be a way to achieve, as I say, kind of a last-minute compromise,” Kyl said.

‘Last-Ditch Effort’

It would have cut $643 billion, according to a Republican aide, almost entirely by cutting spending though it would have raised taxes by $3 billion by ending a break for corporate jet travel. Democrats rejected the offer because it didn’t include enough revenue increases, according to a Democratic leadership aide. Both aides spoke on condition of anonymity because they weren’t authorized to discuss negotiations.

The plan is “unacceptable,” Democratic Senator John Kerry of Massachusetts said Nov. 18. Not requiring more taxes from high earners would be “unconscionable,” Kerry said. Senator Patty Murray, a Washington Democrat who co-chairs the panel, said Nov. 18 “where the divide is right now is on taxes, whether or not the wealthiest Americans should share in the sacrifice.”

Representative Dave Camp, a Michigan Republican and panel member, said Nov. 18 that Democrats “have not been willing to make the common-sense spending reductions we need to make but yet are continuing at the same time to insist on $1 trillion in job-killing tax increases.”

‘Sequestration’

Failure by the supercommittee to agree on a plan by Nov. 23 could trigger automatic, across-the-board spending cuts of $1.2 trillion starting in January 2013. That process, called “sequestration,” is designed to spare the U.S. from another credit downgrade.

After Standard & Poor’s downgraded the U.S. AAA debt on Aug. 5, the government’s borrowing costs fell to record lows as Treasuries rallied. The yield on the benchmark 10-year Treasury note fell from 2.56 percent on Aug. 5 to below 1.72 percent on Sept. 22. The yield on the 10-year note was at 2.01 percent at 5:14 p.m. on Friday, Nov. 18, in New York, according to Bloomberg Bond Trader prices.

Some Democrats who represent districts with many elderly or low-income residents said sequestration is preferable to some options being considered by the supercommittee, such as cutting Medicare benefits.

“Sequestration is not the worst thing that could happen,” said Representative Keith Ellison, a Minnesota Democrat and co- chairman of the Congressional Progressive Caucus. “Getting a deal where there’s minimal revenue and all cuts on ordinary people, I’d rather see sequestration than that.”

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Steven Sloan in Washington at ssloan7@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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Iran: Oil Market Will Suffer If Exports Disrupted

By Anthony DiPaola and Ladane Nasseri - Nov 20, 2011 5:18 PM GMT+0700

Any disruptions to Iran’s oil exports would create “severe problems” for the global crude market, Oil Minister Rostam Qasemi said in an interview broadcast by Al Jazeera television.

Iran will seek a “fair price” for crude when the Organization of Petroleum Exporting Countries meets next on Dec. 14, Qasemi said, adding that the global market for crude does not face a shortage.

“There is currently no need to use oil as a political tool,” he said in the interview posted yesterday on the news channel’s website. “In case we are urged to and feel it is necessary, we will use it as a political tool.”

Iran, the second-biggest producer in OPEC, has come under increasing pressure from the U.S. and its allies, which accuse the country of seeking to develop nuclear weapons. Iran’s government rejects the claim, saying it wants nuclear technology to provide energy for a growing population.

Qasemi told the broadcaster his nation see no threat to its crude production or obstacles to its exports and will continue to supply enough oil to world markets. The country holds 154.8 billion barrels in crude reserves, he said.

OPEC’s last meeting in June ended without an agreement on output quotas after Iran and five other members rejected a proposal by Saudi Arabia, the group’s largest producer, for the group to raise output by 1.5 million barrels a day. OPEC pumped 30.14 million barrels a day in October, according to data compiled by Bloomberg.

To contact the reporter on this story: Anthony DiPaola in Dubai at adipaola@bloomberg.net; Ladane Nasseri in Tehran at lnasseri@bloomberg.net

To contact the editor responsible for this story: Bruce Stanley at bstanley5@bloomberg.net

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Spain Votes as Polls Show Crisis Handing Rajoy Landslide

By Emma Ross-Thomas and Angeline Benoit - Nov 20, 2011 4:04 PM GMT+0700
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Conservative People's Party leader Mariano Rajoy. Photographer: Denis Doyle/Bloomberg

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Nov. 18 (Bloomberg) -- Antonio Barroso, an analyst at Eurasia Group, talks about the election in Spain and the country's debt crisis. He speaks with Louise Beale and David Tweed on Bloomberg Television's "Last Word." (Source: Bloomberg)

Spaniards may be set to hand opposition leader Mariano Rajoy the biggest majority in almost three decades as the risk of Spain becoming the next nation overwhelmed by Europe’s debt crisis bolsters support for his People’s Party.

Voting started at 9 a.m. in mainland Spain as polls showed Rajoy may win as many as 198 of the 350 seats in Parliament, the largest majority any Spanish government has secured since 1982. The campaign, focused on the stagnating economy and 23 percent jobless rate, ended on Nov. 18 with borrowing costs near records. That prompted Rajoy, 56, to say he hopes Spain won’t need a bailout before the new government takes over in December.

Voters already bearing the deepest budget cuts in Spain’s three-decade democratic history may be prepared to accept further austerity in exchange for Rajoy’s pledge to create jobs. The ruling Socialists are set to become the fifth government ejected because of the sovereign debt crisis, after Italy and Greece appointed technocratic governments and Ireland and Portugal fired their leaders after they sought bailouts.

“Rajoy will likely implement quick policy changes in an effort to impress markets and his European partners,” said Antonio Barroso, an analyst at Eurasia and a former government pollster in Spain. “A strong PP victory, coupled with the swift policy changes, could send a positive signal to markets.”

Pre-Euro High

Polling stations close at 8 p.m. in mainland Spain and the first results will be published after 9 p.m. by the Interior Ministry. Almost 36 million people are eligible to vote, including 1.48 million living abroad.

Spaniards go to the polls as the country is being forced to pay as much to borrow as it did before joining the euro in 1999. The 10-year bond yield rose as high as 6.78 percent on Nov. 17, with the gap between Spanish and German borrowing costs ending the week at 441 basis points, or 4.41 percentage points.

The PP, which shepherded Spain into the single currency, has campaigned on its economic record, which includes eliminating a 7 percent budget deficit in the eight years to 2004 and reducing the gap between Spanish and German borrowing costs from 300 basis points to seven. The unemployment rate fell to 11 percent from 18 percent under the PP as a construction boom fueled hiring.

Support Eroded

The surge in unemployment since the collapse of that boom in 2008 and spending cuts aimed at staving off contagion from the Greek crisis undermined support for the Socialists. Alfredo Perez Rubalcaba, the former deputy prime minister who is standing after Prime Minister Jose Luis Rodriguez Zapatero decided not to run, has failed to win back traditional supporters even as he pledges new taxes on banks and the rich.

“Nothing will change except public spending will be reduced even more if the PP wins,” Ester Panduro, a 39 year-old accountant, said in an interview in Madrid’s Puerta del Sol, where 100 people protested against the electoral system yesterday.

As the campaign drew to a close, Rubalcaba’s strategy focused more on stemming the PP’s advance than victory for the Socialists. He said in an interview on Nov. 18 with El Pais, a traditional Socialist ally, that what is “really worrying is the Spanish right wing taking over with absolute power.”

“Rajoy is coming to power not so much because Spaniards think the PP is the solution to their problems, but because with unemployment over 20 percent, the Socialist base has just collapsed,” said Ken Dubin, a political scientist who teaches at Carlos III University and the IE business school in Madrid.

Power Vacuum

Rajoy, who has been in politics for 30 years, has lost two general elections as the PP’s candidate. Polls indicated he was set to win the 2004 vote before the bombing of commuter trains in Madrid that killed 192 people. That attack, claimed by a group linked to al-Qaeda, and the PP government’s response to it, helped flip the vote in favor of the Socialists.

Most opinion polls show Rajoy with at least a 15 percentage-point lead. Even if he does clinch the majority that polls predict, Spain faces a power vacuum of as long as a month before the new government is sworn in. Spanish law doesn’t allow Parliament to resume any sooner than Dec. 13, with the new government not voted in until the following week. There’s no way of bringing forward that timetable, Jose Blanco, the government’s spokesman and development minister said on Nov. 18.

The PP says it will cut “superfluous spending,” without giving details, and promises a “restructuring” of the financial system, without saying what this will involve. Rajoy has pledged to maintain the purchasing power of pensions, which accounted for 112 billion euros ($151 billion) in the 2011 budget, and said everything else can be trimmed.

Obligations, Commitments

“Spain wants to be in the euro,” Rajoy said in an interview on Nov. 18 with Onda Cero radio. “The euro brings with it obligations and commitments, the first is not to spend what you don’t have. Spain will do its homework, as we already did in 1998.”

While Rajoy and Rubalcaba offer opposing solutions for Spain’s stagnating economy, both are former deputy premiers and education ministers who have also fought the Basque terror group ETA as heads of the Interior Ministry. They both sport gray beards, and are older than Zapatero, who came to power aged 43 in 2004. Rubalcaba, who has a doctorate in chemistry and is a former sprinter, served under former Prime Minister Felipe Gonzalez. Rajoy, a civil servant, worked for former Prime Minister Jose Maria Aznar.

To contact the reporters on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net; Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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‘Doubtful’ Supercommittee Will Agree, Kyl Says

By Brian Faler and Steven Sloan - Nov 20, 2011 6:38 AM GMT+0700

A member of the congressional supercommittee expressed doubt today that the panel would reach an agreement on a deficit-reduction package by its Nov. 23 deadline.

Senator Jon Kyl called a slimmed-down debt plan rejected this week by Democrats a “last-ditch” effort by Republicans to ensure the panel is able to “at least accomplish something and not come away with a goose egg.”

It’s too late for lawmakers to send new proposals to the Congressional Budget Office to be analyzed for their impact on the deficit, he told reporters.

Kyl, an Arizona Republican, said his colleagues hope that “even at this late date” the committee could put together things that had already been analyzed by the CBO. “I think that’s pretty doubtful at this point but obviously nobody wants to quit until the stroke of midnight,” he said.

The panel has been deadlocked over income-tax increases, with Republicans pushing to permanently extend President George W. Bush’s tax cuts, as well as cuts in politically sensitive entitlement programs such as Medicare.

The deadline for an agreement on how to carve $1.2 trillion out of the budget is Nov. 23, though under the rules a CBO cost estimate of any final plan must be publicly available 48 hours beforehand. There was little sign of urgency today in the mostly empty Capitol. Democratic members of the supercommittee did not meet, while Republicans held a conference call.

‘Not Fair’

Meanwhile, the Democratic Congressional Campaign Committee, charged with electing more Democrats to the U.S. House, fired off a fundraising appeal blasting Republicans on the supercommittee. “Republicans are insisting on eliminating the Medicare guarantee while cutting taxes for millionaires and refusing to include a robust jobs plan,” said the e-mail, which was attributed to House Minority Leader Nancy Pelosi. “That’s not fair” and “let’s seize this moment and show the world Democrats are strong and united.”

Kyl said a pared back deficit-reduction proposal offered this week by Republicans was designed to break the stalemate by steering clear of politically sensitive programs such as Medicare and instead cut other, less controversial types of mandatory spending.

‘Last-Ditch Effort’

“I thought maybe this last-ditch effort to focus just on savings that we had all pretty much agreed was possible might be a way to achieve, as I say, kind of a last-minute compromise,” Kyl said.

It would have cut $643 billion, according to a Republican aide, almost entirely by cutting spending though it would have raised taxes by $3 billion by ending a break for corporate jet travel. Democrats rejected the offer because it didn’t include enough revenue increases, according to a Democratic leadership aide. Both aides spoke on condition of anonymity because they weren’t authorized to discuss negotiations.

The plan is “unacceptable,” Democratic Senator John Kerry of Massachusetts said yesterday. Not requiring more taxes from high earners would be “unconscionable,” Kerry said. Senator Patty Murray, a Washington Democrat who co-chairs the panel, said yesterday “where the divide is right now is on taxes, whether or not the wealthiest Americans should share in the sacrifice.”

Representative Dave Camp, a Michigan Republican and panel member, said yesterday that Democrats “have not been willing to make the common-sense spending reductions we need to make but yet are continuing at the same time to insist on $1 trillion in job-killing tax increases.”

‘Sequestration’

Failure by the supercommittee to agree on a plan by Nov. 23 could trigger automatic, across-the-board spending cuts of $1.2 trillion starting in January 2013. That process, called “sequestration,” is designed to spare the U.S. from another credit downgrade.

After Standard & Poor’s downgraded the U.S. AAA debt on Aug. 5, the government’s borrowing costs fell to record lows as Treasuries rallied. The yield on the benchmark 10-year Treasury note fell from 2.56 percent on Aug. 5 to below 1.72 percent on Sept. 22. The yield on the 10-year note was at 2.01 percent at 5:14 p.m. yesterday in New York, according to Bloomberg Bond Trader prices.

Some Democrats who represent districts with many elderly or low-income residents said sequestration is preferable to some options being considered by the supercommittee, such as cutting Medicare benefits.

“Sequestration is not the worst thing that could happen,” said Representative Keith Ellison, a Minnesota Democrat and co- chairman of the Congressional Progressive Caucus. “Getting a deal where there’s minimal revenue and all cuts on ordinary people, I’d rather see sequestration than that.”

To contact the reporters on this story: Brian Faler in Washington at bfaler@bloomberg.net; Steven Sloan in Washington at ssloan7@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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Spain Set to Vote for Rajoy Cuts as Crisis Claims Fifth Leader

By Emma Ross-Thomas - Nov 20, 2011 6:01 AM GMT+0700

Spaniards may be set to hand opposition leader Mariano Rajoy the biggest majority in almost three decades as the risk of Spain becoming the next nation overwhelmed by Europe’s debt crisis bolsters support for the People’s Party.

Rajoy will win as many as 198 of the 350 seats in Parliament in the national election today, the largest majority any Spanish government has secured since 1982, polls show. The campaign, focused on the stagnating economy and 23 percent jobless rate, ended on Nov. 18 with borrowing costs near records. That prompted Rajoy, 56, to say he hopes Spain won’t need a bailout before the new government can take over in December.

Voters already bearing the deepest budget cuts in Spain’s three-decade democratic history may be prepared to accept further austerity in exchange for Rajoy’s pledge to create jobs. The ruling Socialists are set to become the fifth government ejected because of the sovereign debt crisis, after Italy and Greece appointed technocratic governments and Ireland and Portugal fired their leaders after they sought bailouts.

“Rajoy will likely implement quick policy changes in an effort to impress markets and his European partners,” said Antonio Barroso, an analyst at Eurasia and a former government pollster in Spain. “A strong PP victory, coupled with the swift policy changes, could send a positive signal to markets.”

Pre-Euro High

Polls open at 9 a.m., with almost 36 million people eligible to vote. Polling stations close at 8 p.m. in mainland Spain and the first results will be published after 9 p.m. by the Interior Ministry.

Spaniards go to the polls as the country is being forced to pay as much to borrow as it did before joining the euro in 1999. The 10-year bond yield rose as high as 6.78 percent on Nov. 17, with the gap between Spanish and German borrowing costs ending the week at 441 basis points, or 4.41 percentage points.

The PP, which shepherded Spain into the single currency, has campaigned on its economic record, which includes eliminating a 7 percent budget deficit in the eight years to 2004 and reducing the gap between Spanish and German borrowing costs from 300 basis points to seven. The unemployment rate fell to 11 percent from 18 percent under the PP as a construction boom fueled hiring.

Support Eroded

The surge in unemployment since the collapse of that boom in 2008 and spending cuts aimed at staving off contagion from the Greek crisis undermined support for the Socialists. Alfredo Perez Rubalcaba, the former deputy prime minister who is standing after Prime Minister Jose Luis Rodriguez Zapatero decided not to run, has failed to win back traditional supporters even as he pledges new taxes on banks and the rich.

As the campaign drew to a close, Rubalcaba’s strategy focused more on stemming the PP’s advance than victory for the Socialists. He said in an interview on Nov. 18 with El Pais, a traditional Socialist ally, that what is “really worrying is the Spanish right wing taking over with absolute power.”

“Rajoy is coming to power not so much because Spaniards think the PP is the solution to their problems, but because with unemployment over 20 percent, the Socialist base has just collapsed,” said Ken Dubin, a political scientist who teaches at Carlos III University and the IE business school in Madrid.

Rajoy, who has been in politics for 30 years, has lost two general elections as the PP’s candidate. Polls indicated he was set to win the 2004 vote before the bombing of commuter trains in Madrid that killed 192 people. That attack, claimed by a group linked to al-Qaeda, and the PP government’s response to it, helped flipped the vote in favor of the Socialists.

Vacuum

Most opinion polls show Rajoy with at least a 15 percentage point lead. Even if he does clinch the majority that polls predict, Spain faces a power vacuum of as long as a month before the new government is sworn in. Spanish law doesn’t allow Parliament to resume any sooner than Dec. 13, with the new government not voted in until the following week. There’s no way of bringing forward that timetable, Jose Blanco, the government’s spokesman and development minister said on Nov. 18.

The PP says it will cut “superfluous spending,” without giving details, and promises a “restructuring” of the financial system, without saying what this will involve. Rajoy has pledged to maintain the purchasing power of pensions, which accounted for 112 billion euros ($151 billion) in the 2011 budget, and said everything else can be trimmed.

Obligations, Commitments

“Spain wants to be in the euro,” Rajoy said in an interview on Nov. 18 with Onda Cero radio. “The euro brings with it obligations and commitments, the first is not to spend what you don’t have. Spain will do its homework, as we already did in 1998.”

While Rajoy and Rubalcaba offer opposing solutions for Spain’s stagnating economy, both are former deputy premiers and education ministers who have also fought the Basque terror group ETA as heads of the Interior Ministry. They both sport gray beards, and are older than Zapatero, who came to power aged 43 in 2004. Rubalcaba, who has a doctorate in chemistry and is a former sprinter, served under former Prime Minister Felipe Gonzalez. Rajoy, a civil servant, worked for former Prime Minister Jose Maria Aznar.

To contact the reporters on this story: Angeline Benoit in Madrid at abenoit4@bloomberg.net; Emma Ross-Thomas in Madrid at erossthomas@bloomberg.net

To contact the editor responsible for this story: Craig Stirling at cstirling1@bloomberg.net

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Penn State Wins First Game Without Paterno 20-14 Over Ohio State

By Nancy Kercheval - Nov 20, 2011 8:17 AM GMT+0700

No. 21 Pennsylvania State University defeated Ohio State University 20-14 to win its first college football game since Coach Joe Paterno was fired amid a child sex scandal probe targeting his former defensive coordinator.

Stephfon Green ran for two touchdowns and Anthony Fera kicked two field goals today for the Nittany Lions, who earned a share of the Big Ten’s Leaders Division title. The winner of next week’s game at Wisconsin will play in the conference’s first championship game Dec. 3.

Paterno, 84, who is being treated for lung cancer, was fired Nov. 9 for his handling of child molestation charges against former defensive coordinator Jerry Sandusky. The dismissal ended Paterno’s 46 years at the helm of the Nittany Lions that produced 409 victories.

Green’s 39-yard run and Fera’s 43-yard field goal gave Penn State a 10-0 lead in the first quarter at Ohio Stadium in Columbus.

Braxton Miller scored on a 24-yard run to bring the Buckeyes within three points, 10-7, with 12:32 left in the second quarter. Green sprinted four yards for Penn State before Miller connected with Jake Stoquaneburner to narrow the Nittany Lions’ lead to 17-14. Fera added his second field goal, a 46- yard kick, as time ran out in the first half.

The teams were scoreless in the second half.

Matthew McGloin completed 10 of 18 passing attempts for 88 yards and one interception. Miller had seven passes for 83 yards and one touchdown.

Penn State improved to 9-2 overall and 6-1 in the Big Ten, while Ohio State fell to 6-5 and 3-4 in the conference.

To contact the reporter on this story: Nancy Kercheval in Washington at nkercheval@bloomberg.net

To contact the editor responsible for this story: Michael Sillup at msillup@bloomberg.net

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Iran’s Nuclear Drive May Arm Terrorists: Barak

By Meera Louis - Nov 20, 2011 12:10 AM GMT+0700

Iran’s determination to build nuclear weapons will result in nations such as Egypt, Saudi Arabia and Turkey seeking nuclear arms, starting a “countdown” to terrorists getting nuclear materials, Israeli Defense Minister Ehud Barak said.

“People understand now that Iran is determined to reach nuclear weapons, Barak, a former Israeli Prime Minister, said on CNN’s “Fareed Zakaria GPS” in an interview to be aired tomorrow. “The countdown toward nuclear materials in the hands of terrorists will start, even if it takes half a generation. But more than this, they will use the nuclear umbrella to kind of intimidate neighbors all around the Gulf to sponsor terror.”

Iran may face more international sanctions after a report by the United Nations nuclear watchdog agency said there was “credible” evidence showing Iran worked on bomb components until at least 2010. The country is under four sets of UN Security Council sanctions.

Iran, the Organization of Petroleum Exporting Countries’ second-biggest producer, has dismissed the charges, called the evidence fake and said it only wants atomic power.

The U.S. is trying to draw China and Russia into an agreement to maintain pressure on Iran, President Barack Obama said Nov. 12. The U.S. will continue to work with other countries to pressure Iran because “we are determined to prevent Iran from acquiring nuclear weapons,” White House Press Secretary Jay Carney said in a statement yesterday.

Obama “is an extremely strong supporter of Israel in regard to its security,” Barak said. Barak declined to discuss whether Israel might attack Iran.

Barak also predicted the downfall of Syrian President Bashar al-Assad within a year. The deaths of Libyan leader Muammar Qaddafi and Iraq’s Saddam Hussein have made al-Assad’s response to the Arab Spring uprisings against his rule “more brutal, because he understands that, beyond a certain point, there is no way,” Barak said. “It’s literally a struggle for life or death.”

To contact the reporter on this story: Meera Louis in Washington at mlouis1@bloomberg.net

To contact the editor responsible for this story: Lawrence Roberts at lroberts13@bloomberg.net

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Democrats Disagree With Republicans on Taxes to Cut Deficit

By Catherine Dodge - Nov 19, 2011 9:58 PM GMT+0700

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Nov. 18 (Bloomberg) -- U.S. Representative Dennis Kucinich, an Ohio Democrat, talks about the U.S. economy and prospects for agreement by the deficit-reduction supercommittee by its Nov. 23 deadline. Kucinich, speaking on Bloomberg Television's "InBusiness With Margaret Brennan," also comments on the bankruptcy of MF Global Holdings Ltd. (Source: Bloomberg)

A House Democratic leader said a U.S. deficit-cutting agreement can’t include the extension of Bush-era tax cuts, while an influential Republican said his House colleagues won’t back a deal calling for new tax revenue.

The disagreement underscores the crux of the problem facing a congressional panel seeking to meet a Nov. 23 deadline to trim at least $1.2 trillion from the deficit over the next decade.

Representative Jim Jordan, head of the Republican Study Committee, which pushes for deeper spending cuts, said any deficit-cutting proposal that includes a tax increase is unlikely to clear a majority of the House’s Republicans.

Representative James Clyburn, a Democratic member of the supercommittee, said if Republicans demand an extension of the tax cuts won by President George W. Bush in 2001 and 2003 the chances of an agreement are dim.

“It would be difficult” to win passage of a supercommittee plan that includes more taxes, said Jordan, of Ohio, on Bloomberg Television’s “Political Capital with Al Hunt,” airing this weekend.

“If it’s a net tax increase, this is the most fundamental principle within the Republican Party,” Jordan said. “This is a sacred trust I think we as Republicans have with voters.”

As members of the bipartisan supercommittee negotiate over possible spending cuts and revenue increases, for which some Republicans have voiced support, Jordan said it’s “anyone’s guess” whether the group will agree on a proposal.

‘Big’ Deal Unlikely

“The word is today that they may not get to some kind of agreement,” Jordan said in the interview, taped yesterday. “What I’m most concerned about, though, is we should not have any type of tax increase in this proposal. The last thing we need for our economy is to increase the tax burden on job- creators.”

Clyburn, in a separate “Political Capital” interview airing on the same program, said a large deal approaching $4 trillion isn’t likely. He said he sees a chance of a smaller package as long as Republicans agree to revenue increases.

“I’ve kind of given up on big and bold, but I’m never going to give up on balance,” said Clyburn, of South Carolina.

If Republicans insist on extending Bush tax cuts for the wealthy “then we probably won’t get a deal,” he said.

Clyburn, the third-ranking House Democrat, said he hopes President Barack Obama won’t relent as he did last year and allow the tax cuts of his predecessor to continue again.

“I have no idea whether he will or not,” Clyburn said. “I hold out hope that the president will hold fast.”

Obama, winding up his nine-day trip to Pacific Rim nations, hasn’t been in contact with congressional leaders on the supercommittee talks, according to spokesman Jay Carney. Carney said the president has been in “regular contact with his staff in Washington, including those who are monitoring” the deficit-reduction talks.

Republicans on the supercommittee have offered to increase tax revenue by $300 billion, which was seen by some lawmakers as a breakthrough given the party’s resistance to higher taxes.

Trigger Looms

Democrats are pushing for a larger increase in tax revenue, while Republicans want the plan to tackle long-term growth in spending on Medicare and other federal entitlement programs, creating an 11th-hour deadlock in talks.

Failure by Congress to enact a plan by year’s end that would cut at least $1.2 trillion over the next decade would force that amount in automatic spending cuts beginning in 2013.

Jordan said he’s not persuaded by several previous bipartisan proposals for deficit reduction, including one by the chairmen of Obama’s Simpson-Bowles fiscal commission and one by a group of six senators, which called for a mix of revenue increases and spending cuts.

“The taxes always get raised, and the spending cuts never happen,” he said. “Americans aren’t going to go for this. They say, ‘We are tired of these games, we don’t trust them to come through with the spending cuts.’”

Bush Tax Cuts

Republicans would be open to a proposal by Obama to expand a payroll tax break set to expire at the end of the year to foster job growth, Jordan said.

“If that’s part of a tax package that doesn’t increase the overall burden, I think you could get Republicans to look at it,” he said.

Jordan said he’s confident Republicans will prevail in efforts to extend the tax cuts enacted under President George W. Bush, which are set to expire at the end of 2012.

“We kept them in place just a year ago when Democrats controlled all of government and we got the president to go along,” he said.

Obama relented and allowed the Bush tax cuts to continue last year, Jordan noted, and if Republicans gain full control of the government next year they will support an extension.

The 2012 elections will likely result in Republicans keeping the House majority won last year and winning control of the Senate, he said. He also hopes to see a Republican in the White House, defeating Obama’s bid for re-election.

“And then I’m confident we can extend the Bush tax cuts,” he said. “Some of those have been in place for 11 years. That is tax policy.”

To contact the reporter on this story: Catherine Dodge in Washington at cdodge1@bloomberg.net

To contact the editor responsible for this story: Mark Silva at msilva34@bloomberg.net

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