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| Senate seeks deal to avoid US default as time runs short - Reuters Posted: 14 Oct 2013 09:38 AM PDT WASHINGTON | (Reuters) - U.S. lawmakers in the Senate said on Monday they hoped to reach a deal soon to reopen the government and avert a looming default as investors worried that Republicans and Democrats might not be able to resolve their differences by a Thursday deadline. After weekend negotiations proved fruitless, senators from both parties said they still thought they could reach agreement in the coming hours. With the most unrealistic demands off the table, the two sides were trying to craft a temporary measure that would allow Washington to step back from the ledge. "I'm hopeful we can have something meaningful by the end of the day," Republican Senator Roger Wicker of Mississippi said on MSNBC. The Treasury Department says it cannot guarantee that the U.S. government will be able to pay its bills past October 17 if Congress does not raise the $16.7 trillion debt ceiling by then. It's not clear whether Congress can meet that deadline. Even if Republicans and Democrats in the Senate reach agreement on Monday, hard-liners such as Texas Republican Senator Ted Cruz might be able to delay a vote for several days. The House of Representatives also would need to sign off on the plan. Republican leaders there face strong pressure from a vocal conservative flank that is deeply reluctant to make concessions to President Barack Obama and his Democrats. Many say they won't back any deal that doesn't undercut Obama's 2010 healthcare reform law, the Affordable Care Act - a non-starter for Democrats. "We've got to draw some lines in the sand now. This, to me, is an epic battle over Washington versus America, and I hope America wins," Republican Representative Matt Salmon of Arizona said on CNN. Analysts expect that any deal is likely to come down to the wire. Though Treasury likely will have enough cash on hand to meet its obligations for a week or so, it might be forced to pay a higher interest rate on the bonds it is due to issue on Thursday. Banks and money market funds are already shunning some government bonds that are normally used for short-term loans. In China, the largest foreign holder of U.S. debt, the state news agency Xinhua said it was time for a "de-Americanized world." U.S. stocks fell at the open on Monday. The S&P 500 Index was down 0.53 percent and the Dow Jones Industrial Average was down 0.48 percent by mid-morning. The ongoing government shutdown is beginning to weigh on the economy as well. The hundreds of thousands of federal employees who have been temporarily thrown out of work are likely to get back-pay when the standoff is resolved. But they aren't getting paid now, forcing many to dial back on personal spending and cancel holiday travel plans. Any agreement that would come in the following days would not resolve disagreements over long-term spending and the Affordable Care Act that led to the standoff in the first place. Despite the objections of rank-and-file conservatives like Salmon, many Republicans are eager to move the discussion away from "Obamacare" and toward possible spending cuts. "All of us now are talking about spending, which is where we should have been in the first place," Republican Senator Bob Corker of Tennessee said on MSNBC. Republicans have floated plans that would push back any possible default for several weeks and keep the government open for several months, but Democrats say that would simply set up another market-rattling confrontation which could spook consumers and further weigh on the economic recovery. "If we just extend this to January, we'll be right back in the middle of this," Democratic Senator Mark Begich of Alaska said on MSNBC. (Writing by Andy Sullivan; Editing by Karey Van Hall and Claudia Parsons) |
| Shiller, two others win economics Nobel for 'bubble' warnings - CNN Posted: 14 Oct 2013 04:38 AM PDT  Robert Shiller, one of three Americans to win the Nobel Prize in economics Monday. NEW YORK (CNNMoney) Shiller is a professor at Yale University. He is joined by Eugene Fama and Lars Peter Hansen, who both teach at the University of Chicago. The award was for their work on the pricing of financial assets. Together they concluded that predicting the price of stocks and bonds in the short term is virtually impossible. But they showed it is possible to forecast the broad course of prices over longer periods, such as the three to five years. Shiller was among those who warned in the 1990s that the run-up in stock prices as part of the Internet stock bubble was the result of "irrational exuberance." Last decade, Shiller made similar warnings about the run-up in U.S. home prices. That proved to be correct when the housing bubble burst and plunged the nation into the worst economic downturn since the Great Depression. He helped to develop the S&P/Case-Shiller home price index, which is one of the most closely watched measures of home values. In a press conference Monday, Shiller said economists are still drawing lessons from the bursting of the housing bubble. "I think there's much more to be done. I think it will take decades," Shiller said. "But we've been through financial crises many times in our history and we've generally learned from them." Fama and Hansen are not as well known as Shiller outside the field of economics. Starting in the 1960s, Fama helped to demonstrate that new information is quickly incorporated into stock prices, a fact that makes short-term price predictions difficult. The Nobel committee said that finding helped lead to the emergence of index stock funds, which are now a staple of so many investors' portfolios today. Hansen developed a statistical method that was well suited to testing theories of asset pricing, the committee said. Fama and Hansen were not immediately available for comment early Monday. Last year's prize went to Alvin Roth of Harvard University and Lloyd Shapley of UCLA, whose work on resource allocation was used for everything from matching job applicants to openings to coming up with way to allocate transplant organs to patients. First Published: October 14, 2013: 7:28 AM ET |
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