Finance and Economic

Missouri Gov. Jay Nixon will name the state’s new top job creation official on Friday, his office said Thursday.

The new director of the Department of Economic Development will replace David Kerr, who’s stepping down this month after a little more than two years in the post.

The former AT&T executive and Kansas Commerce Secretary worked to significantly boost Missouri’s exports and led an overhaul of the state’s strategic economic development plan. He also played a key role in negotiations with both Ford and General Motors about plant expansions in the state.

But his tenure was also marked by sluggish job growth and, in recent months, controversy over a sugar plant deal gone awry in Moberly. Meanwhile, efforts by the Nixon administration to re-tool Missouri’s menu of economic incentives largely stalled in the General Assembly. Kerr replaced Nixon’s first economic development chief, St. Louis attorney Linda Martinez, who lasted less than a year in the job.

Whoever takes the seat next will do so ahead of a re-election campaign in which the economy is expected to be a major issue. They will also take the seat on the eve of a Legislative session where tax credits will, again, likely see much debate.

Nixon will visit Kansas City and Springfield (though not St. Louis) to make the announcement.

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The U.S. Treasury again shied away from labeling China a currency manipulator on Tuesday, but it rapped the country for not moving quickly enough on exchange rate reforms.

Some U.S. politicians have argued that China has gained an unfair competitive edge in global markets by keeping the yuan artificially low to boost exports, and pressure has mounted in Congress for President Barack Obama to punish China.

But the administration prefers to tread softly and use diplomacy to effect change. The U.S. Treasury, in a semi-annual report, as usual said that statutes covering a designation of currency manipulator “have not been met with respect to China.”

It repeated its standard line that appreciation in the yuan has been too slow, calling it “insufficient.”

“Treasury will closely monitor the pace of appreciation and press for policy changes that yield greater exchange rate flexibility, a level playing field, and a sustained shift to domestic demand-led growth,” it said in the report to Congress on international economic and exchange rate policies.

The value of the yuan, which Beijing manages closely, has risen 4 percent against the dollar this year and 7.7 percent since China dropped a firm peg against the greenback in June 2010. The Peterson Institute for International Economics recently estimated the yuan was undervalued by 24 percent against the dollar, down from 28 percent earlier in the year. It attributed the change to both Beijing’s policy of gradual currency appreciation and higher Chinese inflation.

At the heart of the friction between the two countries is a U.S. trade deficit with China that swelled in 2010 to a record $273.1 billion from about $226.9 billion in 2009. The cumulative Jan-Oct deficit with China is on track to top that this year, running at around $245.5 billion.

The Senate this year for the first time passed a bill that would require the administration to slap penalties on Chinese imports if it fails to adopt market-based exchange rates. While the measure has made no progress in the lower chamber and is unlikely to become law, it shows the mounting U.S. frustration with its vital trade partner.

President Obama at the November APEC meetings, in his toughest words yet, told President Hu Jintao that China must play by global trade rules and act like “a grown-up.”

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But U.S. Treasury Secretary Timothy Geithner has said the law on the FX report, which requires the administration to determine whether U.S. trade partners are deliberately undervaluing their currencies, is a poor tool to push Beijing on the yuan.

Instead, the United States prefers to argue for change at its regular closed-door meetings with Chinese officials. It also uses international economic forums, such as the Group of 20 leading nations and the International Monetary Fund, to ramp up public pressure on Beijing to move more quickly to a more-flexible currency.

China is the biggest foreign holder of U.S. Treasuries, with about $1.1 trillion, a position that gives it leverage in international economic negotiations. Foreign exchange traders had not expected a change of U.S. tactics.

“It’s not very surprising. It’s sort of sliding it in under the radar. They’re (Treasury) really not in a position to make any major moves at this point,” said Sean Incremona, an economist at 4Cast in New York.

The Treasury Department has not labeled a country a currency manipulator since July 1994, when it cited China. A designation would require the United States to step up negotiations with Beijing on the yuan’s value.

The yuan slipped on Tuesday as strong dollar demand from corporations offset a record high mid-point fixed by the People’s Bank of China. The central bank set an all-time high dollar/yuan mid-point in an apparent move to let the yuan rise a little more at the end of 2011 so as to make the yuan’s full-year nominal appreciation look bigger, traders said.

Some U.S. manufacturers, which have been hit hardest by competition from China and other emerging economies, would still prefer the U.S. government to take a harder line.

“China’s currency is still enormously undervalued,” said Scott Paul, executive director of the Alliance for American Manufacturing, an industry lobby for hard-hit textile, steel and labor groups.

“I’m disappointed that President Obama has now formally refused six times to cite China for its currency manipulation, a practice which has contributed to the loss of hundreds of thousands of American manufacturing jobs.”

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Verizon Wireless was working to get its 4G network back up and running on Wednesday, following a nationwide outage that began in the early morning hours.

Customers across the country, from California to Ohio to Virginia, took to Verizon’s forums to complain that service was knocked out, though gripes were mostly limited to the new 4G LTE data network, which Verizon began to roll out a year ago. Voice calls, texts and 3G data were unaffected, according to the company.

Verizon (, Fortune 500) spokesman Tom Pica confirmed that service returned to normal at around 2 p.m. ET after engineers worked all morning to fix the issue. He did not comment on the cause of the problem.

It was the second nationwide outage in as many weeks for Verizon’s 4G network, and the third since April. That’s a tough pill to swallow for Verizon, which has built its brand on network reliability.

The bad news for Verizon and its customers is that wireless infrastructure experts expect this isn’t the last time the 4G network will go down. Since Verizon was the first company in the world to deploy a 4G LTE network at any great scale, it is dealing with the usual early adopter growing pains.

"Verizon is a pioneer, and it’s suffering the fate that all pioneers face," said Ken Rehbehn, analyst at Yankee Group.

Indeed, each new wave of network technology involves some degree of pain. When the last next-generation network (3G) first deployed, it was brought down by widespread capacity constraints that the carriers had not anticipated. Most notably, AT&T’s (, Fortune 500) 3G network became close to unusable in New York and San Francisco following Apple’s (, Fortune 500) launch of the iPhone 3G in 2008.

4G is a myth (and a confusing mess)

So what’s the trouble with Verizon’s 4G network? Verizon isn’t saying, and it would be very unusual for a network operator to reveal specifics about why it’s having a problem. But experts believe it has to do with the complexities of LTE, which is a much more intricate technology than its predecessors cash advance.

Unlike previous systems that use switches to control traffic, 4G uses "cores," that act like large, centralized command-and-control centers. Switches covered city blocks, but 4G cores are now serving multiple states. If one goes out, entire regions could lose service.

Since it’s a nationwide event, experts believe all the cores may have been affected by a software or hardware issue.

"This is truly indicative of a larger problem," said Robert Laracuente, vice president of business development at Telenetworks in Puerto Rico. "Best case scenario, some routing isn’t programmed as it should be. The worst case scenario is an undetected hardware fault that systemically disrupts the network under certain conditions."

Because this has happened three times now, Laracuente said it would be surprising if Verizon faced a software problem, since the company prides itself on its scrutiny of its engineering. If it is a hardware malfunction, that can be very hard to detect and prevent in the future.

"This is a whole new paradigm of network technology, so I expect that issues will continue to occur," said Akshay Sharma, analyst at Gartner.

Next-generation networks are based end-to-end on Internet Protocol, which routes packets of information over the Internet rather through circuits. That makes 4G about 10 times faster and gives it significantly more capacity for data traffic than 3G, but it also brings a new host of issues to the table.

"IP by its nature is not resilient from day one," Sharma said. "You don’t get resiliency and quality of service for free — you have to engineer that in. That’s a new wrinkle that adds to the challenge."

Verizon’s 4G customers may have to get used to a few bumps as their first-of-its-kind technology gets all the glitches smoothed out. It’s the price pioneers always pay.  

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