Finance and Economic

WARRENTON • A billboard along Interstate 70 encourages drivers to stop in Warrenton and stay awhile.

But with just a handful of shops left at the Warrenton Outlet Center, there are fewer reasons for St. Louisans to make the trek to this city, about 60 miles west of downtown.

The Gap Factory Outlet and Dress Barn have jumped ship, finding apparently sunnier pastures last year at a strip center in Wentzville. The Levi’s Outlet Store, G.H. Bass & Company, and the Famous Footwear Outlet shuttered their locations last month.

And the Nike Factory Store, one of the last major retailers left, is closing in April and moving to the Meadows at Lake Saint Louis.

Elsewhere around the country, many outlet malls continue to thrive, and developers are rushing to build more of them. But Warrenton’s outlet center, operating under an increasingly outdated model, never managed to reach its full potential.

Now the beleaguered center will suffer an ignoble fate shared by other retail properties on the decline: the auction block.

The 200,000-square-foot outlet center will be put up for sale in a three-day online auction starting Monday morning. The minimum starting bid is $375,000.

The listing at auction.com notes that the center was 35 percent occupied in November. But that was before some of the recent departures.

The center opened in 1993 during a national boom in outlet mall construction. It once boasted many notable stores such as Mikasa, Nine West and Jones New York — some names of which are still barely visible above vacant storefronts. At one time, it had upward of 45 stores. Now, only about 10 stores remain.

“Even a few years ago, it was still a vibrant center,” said Michelle Schlenther, Warrenton’s director of economic development. “People would come out and make a day trip out of it. The dad would go play a round of golf while the wife shopped.”

So what happened?

“It’s an older center,” said Linda Humphers, who tracks the outlet mall industry for the International Council of Shopping Centers as editor of Value Retail News. “It’s only 200,000 square feet, and it’s probably a little too far out of town.”

Older outlet malls like Warrenton were built about 40 to 50 miles outside cities because retailers objected to having discounted merchandise so close to their regular-price stores.

But that model has begun to change with newer outlet malls creeping closer and closer in. For example, two proposed outlet mall developments are duking it out to come to Chesterfield within a stone’s throw of Chesterfield Mall.

NOT A DESTINATION

Steve Etcher, executive director of the Boonslick Regional Planning Commission, said the Warrenton outlets never grew to be large enough to be a true shopping destination. A third phase for the center, which would have taken it to more than 100 stores, never materialized.

“You had drive-by shopping but not enough to sustain it,” he said. “It’s not a bad location — you’re right on 70, but it’s not necessarily destination. To me, Lake of the Ozarks is destination. But this ended up being more of an along-the-way thing.”

It didn’t help, he said, that ownership of the center changed hands several times. And then when St. Louis Mills opened in 2003, offering a mix of outlet and regular price stores, that took some wind out of Warrenton, too.

Schlenther also traced some of the decline to several years ago when a number of stores went bankrupt or underwent massive restructuring such as KB Toys, Liz Claiborne and Big Dog Sportswear.

“So a lot of what closed there closed not only in Missouri, but across the nation,” she said quick payday loan. “And it just happened that we had a lot of those in one facility.”

Things got worse when the property fell into receivership a couple years ago, Schlenther said. At that time, the owner was Ariel Preferred Retail Group, which had a portfolio of about seven outlet malls.

“Stores just don’t want to come in and put an investment in because they don’t know when it’s bought what the new owners are going to do,” she said.

Texas-based Woodmont Co. is the receiver that’s managing the property. An on-site outlet manager referred questions to Fred Meno, a Woodmont executive. Meno did not return requests for comment.

Despite the troubles at Warrenton, Humphers said the prospects for an outlet mall in Chesterfield are rosier because the developers behind both projects are large, reputable mall developers.

In November, Simon Property Group, the owner of St. Louis Mills, announced it was joining forces with Woodmont and EWB Development on that proposed outlet project to be called St. Louis Premium Outlets. The project previously went by the name Spirit of St. Louis Outlets.

The other proposed outlet center — Chesterfield Outlets — is being spearheaded by Taubman Centers. The city of Chesterfield has approved its zoning request. And its plans for a 472,000-square-foot upscale outlet center will go before the city’s architectural review board next week.

Aimee Nassif, the city’s planning and development director, said she’s expecting to receive the section plans from the other project any day.

“They are literally kind of racing to the finish line,” she said. “It will be very interesting.”

OTHER USES

But Donna Boehringer hasn’t given up on the Warrenton outlets yet. She has operated her Corner Quilt Fabrics store in the center for about seven years after moving there from another location in town.

The move was good for business. A billboard she has along the interstate also has helped. She estimated about 60 percent of her customers are from out of town.

“Quilters seem to have this sixth sense of quilt shops,” she said. “If there’s one around, they will stop by.”

Boehringer did have her worst year in sales last year, but she attributed that more to the economy than to less traffic at the center. She’s in the process of renegotiating her lease.

“My plans are to stay right here,” she said. “I’m trying to be optimistic because I’d like to see something else come in. But we’ll see.”

Jan Olearnick, executive director of the Warrenton Area Chamber of Commerce, thinks the property holds promise for a mixed-use project. An education center, a health facility and a technology incubator are some of the ideas that have been thrown around.

“It would take a forward-thinking person to try and revive it, but we’re ready,” she said. “Warrenton is definitely a good location for any industry because of our proximity to I-70 and to the railroad — and even to the river.”

On top of that, the city recently got federal approval to build an interchange just west of the outlet center, making for easier access to the site. But the project’s funding source has not yet been determined.

In the meantime, other enterprises have been popping up in the region — though they are not necessarily retail.

A billboard next to the entrance to the outlet center advertises one of them a bit farther west: zip line tours.

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How much is it worth to suffer through a terrifying cruise ship grounding?

Italian ship operator Costa Crociere SpA on Friday put the figure at euro11,000 ($14,460) plus reimbursement for the cost of cruise tickets and extra travel expenses, seeking to cut a deal with as many passengers as possible to take the wind out of class-action lawsuits stemming from the Jan. 13 grounding of its Costa Concordia cruise liner off Tuscany.

But many passengers are refusing to accept the deal, saying they can’t yet put a figure on the costs of the trauma they endured. And lawyers are backing them up, telling passengers it’s far too soon to know how people’s lives and livelihoods might be affected by the experience.

“We’re very worried about the children,” said Claudia Urru of Cagliari, Sardinia, who was on the Concordia with her husband and two sons, aged three and 12, when it capsized.

Her elder son is seeing a psychiatrist: He won’t speak about the incident or even look at television footage of the grounding.

“He’s terrorized at night,” she told The Associated Press. “He can’t go to the bathroom alone. We’re all sleeping together, except my husband, who has gone into another room because we don’t all fit.”

As a result, she said, her family retained a lawyer because they don’t know what the real impact _ financial or otherwise _ of the trauma will be. She said her family simply isn’t able to make such decisions now.

“We are having a very, very hard time,” she said.

Costa’s offer, which covers compensation for lost baggage and psychological trauma, was the result of negotiations with several consumer groups who say they are representing 3,206 passengers from 61 countries who suffered no physical harm when the massive cruise ship hit a reef off the island of Giglio.

It’s not clear, though, how many of those passengers will take the deal, even though they’re guaranteed payment within a week of signing on.

In addition to the lump-sum indemnity, Costa, a unit of the world’s biggest cruise operator, Miami-based Carnival Corp., said it would reimburse uninjured passengers the full costs of their cruise, their return travel expenses and any medical expenses they sustained after the grounding.

Costa said the euro11,000 figure is higher than current indemnification limits provided for by law, and added that it wouldn’t deduct anything that insurance companies might kick in.

The deal does not apply to the hundreds of crew on the ship, many of whom have lost their jobs, the roughly 100 people who were injured in the chaotic evacuation, or the families who lost loved ones.

Sixteen bodies have already been recovered from the disaster and another 16 people who were on board are missing and presumed dead.

On Friday, the first known lawsuit was filed against Costa and Carnival by one of the Concordia’s crew members, Gary Lobaton of Peru. The suit, filed in Chicago federal court, accuses Carnival and Costa of negligence because of an unsafe evacuation and is seeking class-action status.

In Italy, some consumer groups have already signed on as injured parties in the criminal case against the Concordia’s captain, Francesco Schettino, who is accused of manslaughter, causing a shipwreck and abandoning the ship before all those aboard were evacuated.

Schettino, who is under house arrest, deviated from the ship’s charted course to bring the Concordia closer to Giglio, gashing the hull on a reef a few hundred meters offshore. He has said the reef wasn’t on his nautical charts.

In addition, Codacons, one of Italy’s best-known consumer groups, has teamed up with two U.S. law firms to launch a class-action lawsuit against Costa and Carnival in Miami, claiming that it expects to get anywhere from euro125,000 ($164,000) to euro1 million ($1.3 million) per passenger.

German attorney Hans Reinhardt, who currently represents 15 Germans who survived the accident and is in talks to represent families who lost loved ones, said he is advising his clients not to take the settlement.

Instead, he along with Codacons is working with one of the U.S. law firms to pursue the class-action suit in Miami.

“What they have lost is much more than euro11,000,” he said of his clients.

But Roberto Corbella, who represented Costa in the negotiations with consumer groups that led to the offer, said the deal provides passengers with quick and “generous” restitution that with all the reimbursements could amount to some euro14,000 ($18,500) per passenger, even non-paying children.

“The big advantage that they have is an immediate response, no legal expenses, and they can put this whole thing behind them,” he told AP.

Melissa Goduti, of Wallingford, Connecticut, is trying to do just that but hasn’t quite been able to. The 28-year-old, who was traveling with her mother aboard the Concordia, says she can’t sleep at night _ “nothing works, even meds” _ and has been diagnosed with post-traumatic stress disorder.

She said Costa had offered to pay for three to five counseling sessions for the PTSD, but that she’ll need more.

“That will not fix my problem,” she said in an email. “No one is going to get over this tragic event in 3-5 counseling sessions.”

Passenger Ophelie Gondelle of Marseille, France, said euro11,000 was paltry “especially considering the psychological” trauma she endured. She said she and her boyfriend are taking part in a French class-action effort underway instead.

Urru, the Sardinian mother of two, said her family was so traumatized by the grounding that when it came time to go home the day after, they flew to Sardinia from Rome rather than take the ferry because everyone was too terrified to go near a ship.

“It was impossible,” to go by boat, she said.

For the past several days, she has kept busy by preparing a box of goods to send to a resident on the island of Giglio who let her family and their friends _ a total of 10 people _ stay in a holiday apartment the night of the grounding.

Urru said she was sending seven sweaters and two blankets to make up for the things that her family took from the apartment, since they had nothing to guard against the freezing Tuscan chill. She said she was also sending the homeowner some cheese and salami and typical Sardinian sweets.

“Inside this apartment, it was so warm, so welcoming. They gave us everything that was inside the house,” Urru said. “They were truly, truly wonderful.”

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Millionaires can be just like everyone else. At least when it comes to paying taxes.

Mitt Romney released records this week that show he pays a tax rate of about 15 percent of his income. The relatively low figure is raising eyebrows because it’s on par with the rate paid by many middle-class households. That’s despite the Republican presidential candidate’s impressive income of $45 million over the past two years.

The disparity seems to fly in the face of the basic rule that tax rates move in tandem with wages; the more you earn, the more you pay. So Romney’s disclosure may stir suspicions that the system is tilted toward the rich.

In his State of the Union speech Tuesday night, President Barack Obama focused on the issue by noting that a quarter of all millionaires pay lower tax rates than millions of middle-class households.

“We need to change our tax code so that people like me, and an awful lot of members of Congress, pay our fair share of taxes,” Obama said in a speech that repeatedly touched on the gap between the rich and poor.

On average, the wealthy pay taxes at a much higher rate than the middle-class individuals. But the primary reason that many pay a lower tax rate is that more of their income comes from investments, which is generally taxed at a far lower rate than wages.

Even if investment income doesn’t play a big role in your finances, understanding the basics of how tax rates work can help even the average wage earner save hundreds, if not thousands of dollars a year.

Here’s an overview of what you need to know:

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TAX RATE BASICS

Although it’s common to grumble about taxes, taxpayers often don’t know precisely what percentage of their income goes to the government. So an essential starting point is to look at how tax rates are applied.

Taxpayers can currently fall into one of six federal tax brackets depending on their taxable income. This amount includes items such as wages and distributions from retirement accounts. The tax rate for each bracket ranges from 10 percent to 35 percent. This is the most basic building block of tax planning because your taxable income can be reduced considerably by various credits, exemptions and deductions.

Here’s the breakdown of how much single filers would pay in federal income taxes depending on their taxable income for 2011:

1. 10 percent - income up to $8,500

2. 15 percent - over $8,500 up to $34,500

3. 25 percent - over $34,500 up to $83,600

4. 28 percent - over $83,600 up to $174,000

5. 33 percent - over $174,400 up to $379,150

6. 35 percent - amount over $379,150

Keep in mind that these are marginal rates, meaning your income is taxed in tiers. The first $10,000 you earn, for example, is taxed at a lower rate than the next $10,000.

So let’s say you earned $100,000, putting you in the 28 percent tax bracket. This doesn’t mean you’d fork over $28,000 in federal income taxes. It means that the amount you earn above a certain threshold is taxed at 28 percent. Your federal income taxes would actually be closer to about 22 percent of your income.

The current federal rates are set to expire at the end of this year. If Congress doesn’t act by then, the rates would revert to levels from before the Bush-era tax cuts, which ranged from 15 percent to 39.6 percent.

For now, federal income tax rates overall are near historic lows, says Joseph Rosenberg, a research associate at the Tax Policy Center in Washington, D.C. He also said that nearly half of Americans do not pay any federal income taxes as a result of various exemptions given to those with dependents and limited incomes.

Federal income taxes are only a piece of the larger tax picture, however. Payroll taxes, which go toward Social Security and Medicare, eat up another 5.65 percent of wages. That rate returns to 7.65 percent if the payroll tax cut pushed by Obama isn’t extended past February.

State taxes are another factor and can vary widely, with rates ranging from as low as 3.4 percent in Indiana to 11 percent in Hawaii and Oregon, according to H&R Block’s Tax Institute. A handful of states, including Alaska and Florida, do not have an income tax.

THE EXCEPTIONS

Not all income is taxed at the rates outlined above. A key exception is any money earned from long-term investments, such as stocks, mutual funds and real estate held for at least a year. This income is classified as capital gains and is taxed at a flat 15 percent. That’s regardless of whether it’s $100 or $1 million.

“This is why someone who’s a millionaire might have an effective tax rate that’s lower,” said Gil Charney, a tax analyst with H&R Block’s Tax Institute. “A higher percentage of their income is going to be from long-term investment income.”

In Romney’s case, a chunk of his income in 2010 and 2011 came from Bain Capital, the private equity firm he founded and managed between 1984 and 1999.

Bain still pays Romney “carried interest,” which is a classification of pay for managers of hedge fund and private equity firms. Critics say this type of compensation and should be taxed as salary at ordinary rates. But as it stands, carried interest is considered capital gains because it’s profit in excess of what investors paid into the fund, Charney said.

The tax rate for capital gains wasn’t always 15 percent. The rate has moved up and down through the years. In the 1970s, for example, the figure was close to 40 percent. And if Congress doesn’t act by the end of the year, the capital gains tax rate will revert back to 20 percent.

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REDUCING TAXES

Tax rates are subject to political influences. But there are a few standby strategies taxpayers can use for reducing their tax bill.

A key tactic is to reduce taxable income; this is why financial planners are such advocates of maximizing contributions to 401(k) accounts. Workers can reduce their taxable income by as much as $17,000 a year. For traditional individual retirement accounts, the maximum contribution is $5,000 a year.

Most large employers also let workers set aside up to $5,000 of pre-tax wages in a health care flexible spending account. This money can be used for a variety of medical costs, including co-pays, prescription drugs and supplies such as cold packs.

There are also numerous tax breaks for donations and education and health care costs that you may incur anyway.

Not everyone will be able to get their tax rate down to 15 percent. Yet there are numerous steps you can take to minimize your tax bill.

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Greece is still hopeful that it will be able to reach a deal with private bondholders to cut its massive debt _ despite tougher terms set by its European partners.

On the front line of Europe’s sovereign debt crisis, Athens is trying to get its private creditors _ banks and other investment firms _ to swap their Greek government bonds for new ones with half their face value, thereby slicing some euro100 billion ($130 billion) off its debt. The new bonds would also push the repayment deadlines 20 to 30 years into the future.

However, the main stumbling block over the past few weeks to securing this deal has been the interest rate these new bonds would carry. A high interest rate could buffer losses for investors, but would also require the eurozone and the International Monetary Fund to put up more than the euro130 billion in rescue loans they promised in late October.

In the early hours of Tuesday, politicians representing the 17 countries that use the euro as their currency drew a firm line on the Greek debt restructuring.

Jean-Claude Juncker, the Luxembourg prime minister who chaired a meeting of finance ministers on efforts to fight the crisis, said the average interest rate over the lifetime of the new Greek bonds must “clearly below 4 percent,” with an average rate of less than 3.5 percent for the period until 2020 _ far below the 4 percent demanded by the Institute of International Finance, which has been leading the negotiations for the private bondholders.

The caps on the interest rates underline that the eurozone and the IMF are unwilling to increase new rescue loans above the promised euro130 billion, even though Greece’s economic situation has deteriorated. After already granting Greece a euro110 billion bailout in May 2010, the eurozone and the IMF are threatening to withhold further funding for the country, which has repeatedly failed to hit budget and reform targets required in return for the financial aid.

The interest rate caps will also seriously test the willingness of private bondholders to agree to a debt deal voluntarily. IIF head Charles Dallara over the weekend had characterized the bondholders’ most recent offer as the best possible.

Greek finance minister Evangelos Venizelos was nevertheless confident that the two sides could find common ground.

“We have the green light from the Eurogroup to close the deal with the private sector in the next few days,” Venizelos said in Brussels.

The alternative to a voluntary deal would be to force losses on to investors _ a move that the eurozone has so far been unwilling to make. Officials fear that a forced default could trigger panic on financial markets and hurt bigger countries like Italy, Spain or even France.

Dutch Finance Minister Jan Kees de Jager has said that a voluntary deal was not a must and that getting Greece’s debt down to a sustainable level was a bigger priority.

“Greece and the banks have to do more in order to reach a sustainable debt level,” he told reporters Tuesday as he arrived for a second day of meetings with his European counterparts. “We have to await the discussions about that because a sustainable debt level is absolutely a precondition for the next (rescue) program.”

Europe’s finance ministers are meeting in Brussels to discuss other elements of their efforts to fight the wider crisis _ including a permanent bailout fund for nations in financial distress and a balanced budget treaty.

Greek stocks opened lower Tuesday, shedding a collective 3 percent one day after optimism on the debt writedown deal sparked a 5 percent rally.

Meanwhile, updated budget execution figures released by the Greek Finance Ministry showed that despite massive spending cuts, the country’s fiscal deficit for 2011 was actually higher than in 2010.

Last year’s fiscal deficit hit euro21.72 billion ($28.27 billion) _ euro270 million ($350 million) more than in 2010.

Revenues were euro910 million ($1.18 billion) below target, but the ministry said this was offset by higher-than-anticipated spending cuts of euro896 million ($1.16 billion).

These figures are on a cash basis, and exclude some categories of spending taken into account in calculating the final budget deficit for 2011 _ which Greece has pledged to cut to about euro20 billion ($26 billion).

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Nicolas Paphitis in Athens, Greece, contributed to this story.

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An email landed in my inbox the other day from a startup called Timehop. In that email, there were pieces of my online life posted a year ago that day.

"Feeling inspired," I had tweeted January 6 , 2010. And then there was a picture I had posted of my best friend sitting at our favorite local restaurant in the East Village, the one that months later closed its doors after 20 years.

The next day, I received an email documenting a tweet I’d sent to another good friend leaving CNN. "We’re losing a good one," I tweeted him in farewell. Later that day, I posted a picture of my favorite building lit by afternoon sunlight in what has now become my old neighborhood.

Nostalgic? Just a bit.

That’s why Timehop is betting our social media history will become more important in a world where much of our lives are documented online.

Sign up and connect your Twitter, Foursquare, Facebook, and Instagram account and every morning a piece of your social media history will land in your inbox showing what you tweeted a year ago on that date, the pictures you posted, and the places you were.

"We’re producing enough content in digital form that we have a digital past," Timehop co-founder Jonathan Wegener said. "You’re following your own life story, which is pretty interesting." Wegener added that Timehop has tens of thousands of subscribers.

The interest in eventually looking back online is part of the reason Facebook overhauled its interface to create Timeline, a new version of the site that would also serve as a digital scrapbook and essentially, a story of our lives.

Until Facebook launched Timeline, it was tough to view your past actions on the service.

"We knew people wanted to dig back in," Meredith Chin, manager of product communications at Facebook said. "We wanted people to be able to see a return on investment they put in over the years and also look back and reflect things that were important to them."

Companies like Foursquare and Twitter don’t allow users an easy way of looking back at old tweets and check-ins, and Timehop hopes to position itself as the place to do that.

"Everyone’s focused on real time and there’s an incredibly powerful product to be built on the past," Wegener said. "That’s the product we’re building."

Code Year draws 200,000 aspiring programmers

Timehop was a spin off of 4SquareAnd7YearsAgo, which was originally built out of a Foursquare hackathon in February of last year. That service simply sent you reminders of your Foursquare check-ins in the past credit reports free.

Wegener was a part of the latest Techstars class, an influential incubator program in New York that matches entrepreneurs with mentors. He was working on another startup called FriendsList, which was meant to take on Craigslist.

Wegener said Timehop was always a side startup but people just latched on to it. So he stopped working on FriendsList and is now working on Timehop full time with two other coworkers. He wouldn’t comment on VC funding.

The service uses the public APIs from social networks like Twitter and Foursquare to collect that data and send it to users in a daily email.

"What’s the point?" you might ask. I thought the same, but in a world where our musings are tweeted and our favorite moments shared on our smartphones, it doesn’t hurt to have a little reminder of where we were a year ago.

Wegener says the gentle digital reminders from the past in a daily email are "emotionally powerful," citing users who are reliving their child’s birth and viewing pictures they posted a year earlier.

But what happens when we don’t want to be reminded of the past? What if the daily reminder mentions an ex-boyfriend or someone who has since died?

Wegener admitted that’s been a problem for Timehop. "We’ve had a surprising number of people unsubscribing due to people not wanting to relive a tough patch of history," he said.

The crew is currently working on a filter that would allow users more control over their reminders and a snooze feature that would turn off the service temporarily.

Wegener, who has spent nearly a year on the project, says the tweets we send, the pictures we post, and the other bits of media we’ve started creating on a daily basis will ultimately gain value.

"The content you create gains value with time. So whether it’s a photograph or tweet, it becomes more emotional with time — it ages like wine," he said.

Of course, the philosophy must be backed by a business plan and it’s not clear whether Timehop will be able to pull that off. Timehop eventually hopes to make money from advertising. Wegener said there is also potential for virtual gifts connected with a service that celebrates the past.

Only time will tell if our digital past will be a success in the future. We’ll sign up for Timehop and check back in a year. 

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Federal Reserve Bank of Chicago President Charles Evans said the drop in the unemployment rate to 8.5 percent may be partially reversed in coming months.

NEW YORK, N.Y.

Iran’s navy said Sunday it test-fired an advanced surface-to-air missile during a drill in international waters near the strategic Strait of Hormuz, the passageway for one-sixth of the world’s oil supply.

Iran’s state TV said the missile, named Mehrab, or Altar, is designed to evade radar and was developed by Iranian scientists. The report said the missile was tested Sunday but provided no further details.

A leading Iranian lawmaker said the sea maneuvers serve as practice for closing the Strait of Hormuz if the West blocks Iran’s oil sales. After top Iranian officials made the same threat a week ago, military commanders emphasized that Iran has no intention of blocking the waterway now.

The exercise covers a 1,250-mile (2,000-kilometer) stretch of water beyond the Strait of Hormuz, including parts of the Indian Ocean and the Gulf of Aden.

The drill, which could bring Iranian ships into proximity with U.S. Navy vessels that operate in the same area, is Iran’s latest show of strength in the face of mounting international criticism over its nuclear program. The West fears Iran’s program aims to develop atomic weapons _ a charge Tehran denies, insisting it’s for peaceful purposes only.

The 10-day exercise drew significant attention after the Iranian warnings about closing the strait. Iranian military officials later appeared to back away from that threat.

A spokesman for the exercise, Rear Adm. Mahmoud Mousavi, made a similar conciliatory comment on Sunday.

“We won’t disrupt traffic through the Strait of Hormuz. We are not after this,” the semiofficial ISNA news agency quoted him as saying.

Prominent lawmaker Ismail Kowsari offered a different view. He said the war games are part of Iran’s preparations to close the vital waterway if sanctions are imposed.

“Iran’s armed forces have practiced operations to close the Strait of Hormuz several times,” the semiofficial Fars news agency quoted Kowsari as saying Sunday.

“If we feel that the enemies want to prevent our oil exports, definitely we will close the Strait of Hormuz,” he said.

Mousavi said the missile that was tested Sunday is one of the newest in the navy’s arsenal.

“It’s equipped with state-of-the-art technology and a built-in system that enables it to thwart jammers,” Mousavi told state TV. One way to deflect surface-to-air missiles is to confuse their guidance systems.

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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.”

MORE OF THE SAME

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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