Finance and Economic

Racing the debt clock, Congress is working on dual tracks while President Barack Obama appeals to the public in hopes of influencing a deal that talks have failed to produce so far.

“We have to ask everyone to play their part because we are all part of the same country,” Obama said Saturday, pushing a combination of spending cuts and tax increases that has met stiff resistance from Republicans. “We are all in this together.”

In his weekly radio and Internet address, Obama said the wealthiest must “pay their fair share.” He invoked budget deals negotiated by GOP President Ronald Reagan and Democratic House Speaker Tip O’Neill, and Democratic President Bill Clinton and Republican Speaker Newt Gingrich.

“You sent us to Washington to do the tough things, the right things,” he said. “Not just for some of us, but for all of us.”

As a critical Aug. 2 deadline approached, the chances that Obama would get $4 trillion or even $2 trillion in deficit reduction on terms he preferred were quickly fading as Congress moved to take control of the debate.

House Republicans prepared to vote this coming week on allowing an increase in the government’s borrowing limit through 2012 as long as Congress approved a balanced-budget constitutional amendment, which is highly unlikely.

In the Senate, the Republican and Democratic leaders worked on a bipartisan plan that would allow Obama to raise the debt limit without a prior vote by lawmakers. The talks focused on how to address long-term deficit reduction in the proposal in hopes of satisfying House Republicans.

In the Republicans’ address Saturday, Sen. Orrin Hatch of Utah argued for passage of a balanced-budget amendment. He blamed Democrats for failing to embrace adequate budget cuts and said “the solution to a spending crisis is not tax increases.”

An amendment that requires a balanced budget, he said, “would put us on a path to fiscal health and would prevent this White House or any future White House from forcing more debt on the American people faxless cash advance.”

The government said Friday it was using its last stopgap measure to avoid exceeding the current $14.3 trillion debt limit. Administration officials, economists and the financial markets have warned that missing the Aug. 2 deadline and precipitating a government default would send convulsions through an already weakened economy.

In a news conference Friday, the president argued that he had the public on his side as in calling for a large deficit reduction package that included spending cuts and increased tax revenues. But Republicans have flatly rejected any proposal from Obama that contains additional revenue from closing tax loopholes, restricting the value of deductions for the rich, increasing tax rates for hedge fund managers or ending oil and gas subsidies.

“This is not a matter of the American people knowing what the right thing to do is,” Obama said. “It’s a matter of Congress doing the right thing and reflecting the will of the American people.”

Obama had held five straight days of meeting with congressional leaders at the White House, but none of the three options he proposed _ deficit cuts of $4 trillion, $2 trillion or $1.5 trillion over 10 years _ were unlocking enough support to increase the debt ceiling by the $2.4 trillion Obama wants to make it last beyond the 2012 elections.

Essentially declaring those discussions over, Senate Republican leader Mitch McConnell said Friday: “”Now the debate will move from a room in the White House to the House and Senate floors.”

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The U.S. Justice Department is investigating Credit Suisse Group’s offshore business with wealthy American clients as part of a larger probe into suspected U.S. tax evaders, the Swiss bank said Friday.

Credit Suisse said it was informed of the investigation Thursday and will cooperate with U.S. authorities within the limits set by Swiss banking secrecy.

“The investigation concerns historical private banking services provided on a cross-border basis to U.S. persons,” the bank said in a statement. “It has been reported that the U.S. authorities are conducting a broader industry inquiry,” it added.

Credit Suisse is the most high-profile Swiss bank to be targeted by U.S. investigators since rival UBS AG became embroiled in a tax evasion probe three years ago. Zurich-based UBS admitted to helping U.S. clients hide money on offshore accounts and ended up paying a fine and giving U.S. authorities details on thousands of American account holders instant credit report. The case prompted Switzerland to soften its strict banking secrecy rules in response to international pressure.

Observers had expected a formal investigation against Credit Suisse after three former and one current employee of the bank were indicted by U.S. authorities in February on charges of conspiring to help American tax cheats.

Analysts at Zuercher Kantonalbank noted that a new treaty currently being discussed by Bern and Washington _ which would automatically tax the accounts of American bank clients in Switzerland _ might ease the pressure on Credit Suisse and other Swiss banks.

Shares in Credit Suisse were down 1.5 percent at 30.13 Swiss francs ($36.88) on the Zurich exchange.

The bank releases its second-quarter results July 28.

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Italian markets are buoyant on expectations that the Senate will approve a package of austerity measures that is key to shoring up confidence in the country’s financial future.

The benchmark FTSE MIB was up 0.5 percent, the only European index to trade higher Thursday morning.

Italy’s finance minister has vowed that the austerity measures, which aim to balance the budget by 2014, will get final approval by the lower house of parliament on Friday.

The government fast-tracked the approval _ from an original deadline of August _ to soothe jittery markets.

Italy will also hold its second bond sale this week, seeking to raise euro5 billion ($7 billion) in 5- to 15-year bonds from the markets. Italy easily raised euro6.75 billion in 12-month debt on Tuesday, though at higher rates.

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The Canadian housing market is due for a correction, but it will likely be a slow decline rather than a sharp drop, says a report from the Canadian Imperial Bank of Commerce.

The South Grand Del Taco may have more than 12,000 fans on Facebook, but one powerful priest across the street is decidedly not among them.

St. Louis University President Father Lawrence Biondi last week sent a letter to St. Louis Mayor Francis Slay voicing his support for plans to demolish the saucer-shaped taco stand and replace it with new buildings.

In his letter, a copy of which was obtained by the Post-Dispatch, Biondi said “the site has attracted unwanted criminal activity and has generated numerous traffic issues over the years.”

“With so many Saint Louis University students living so close to this property, this property’s land use is cause for concern for parents, students, faculty and staff,” he wrote. “I also can tell you that student leaders support Mr. Yackey’s redevelopment efforts.”

Biondi has no official say in the matter - it’s in the hands of the Board of Aldermen and then, likely, the city’s Preservation Board - but he’s clearly a heavyweight in Midtown development business cards design. His university has bought up lots of land in the neighborhood and launched several large-scale projects. And, he says, Yackey’s project is the kind of thing Midtown needs more of.

“It is our belief that we should not stand in the way of this progress,” he wrote.

The Del Taco itself, which had been under Chapter 11 bankruptcy protection since late 2009, closed last week. The building itself still stands, with St. Louis Aldermen set to make a final vote Friday on a blighting and redevelopment plan for the site.

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Greece was pulled back from impending default Saturday, when eurozone finance ministers signed off on a vital loan installment. But the country’s international creditors are showing more concern over whether it can service its debt in the long run.

Athens will get a euro12 billion ($17.39 billion) tranche of its existing euro110 billion rescue package by July 15, in time to meet several bond repayment deadlines this month and next, the finance ministers of the 17 countries that share the euro said in a statement Saturday evening. The eurozone and the International Monetary Fund will also continue to prop up Greece’s struggling economy in the coming years, with a second package of aid loans to be finalized by September.

While the renewed commitments save Greece from immediate collapse, even its international creditors _ long the biggest optimists on the country’s prospects _ are warning that getting down a debt of 160 percent of economic output will be a difficult balancing act.

“The Greek government debt will remain for many years at a high level and, therefore, subject to possible adverse developments that cannot be predicted,” the European Commission, the EU’s executive and one of the three institutions in charge of Greece’s bailout, said in a report published Saturday.

Especially lower than expected economic growth “would put the debt trajectory on a clearly unsustainable upward path,” the commission said.

In an illustration showing several scenario’s for Greece’s debt load, growth of just 1 percentage point below expectations would leave Greece’s debt around 170 percent of gross domestic product past 2020, with the graph pointing firmly upward.

The report, the basis for the ministers’ decision to release the July aid installment and prepare a new bailout, is the most pessimistic assessment from the commission yet. Private analysts and economists have long questioned the sustainability of Greece’s debt. However, the European Union, the European Central Bank and the IMF have so far, at least publicly, upheld their belief that Greece’s situation is manageable.

The Commission still maintains that it is “not unrealistic to assume” that Greece can cut its deficits to the targets set out in its bailout program, and thereby slowly chip away at its debt. But the report puts a sizable question mark over the country’s ability _ and willingness _ to implement the reforms its creditors say are necessary to get the economy growing again.

“Solvency depends on the political and social conditions which allow or not the implementation of the required policies,” the report cautions.

The warning has a clear ring to it, following weeks of sometimes dramatic back and forth between Greek authorities and the country’s international creditors, which culminated earlier this week in the narrow passage of unpopular new austerity measures through parliament amid violent demonstrations in Athens.

“Given the length, magnitude and nature of required reforms, political and social consensus remains a prerequisite for success,” the Commission said in its report, repeating calls from European leaders on Greece’s opposition to start supporting the bailout program.

For the first time, the Commission’s report also contains a section on debt restructuring _ including a scenario for a 40 percent haircut, a forced reduction in the value of Greek bonds.

The EU has so far ruled out any haircuts on bonds, and in its report the Commission maintains that the negative consequences of a restructuring would outweigh any gains from debt restructuring.

A 40 percent haircut would devastate Greek banks, wiping out the capital cushions and triggering massive deposit flight, the Commission warns. Restructuring Greece’s debt also risks “creating a permanent shift in investor sentiment and lead to self-fulfilling prophecies for other vulnerable Member States,” _ shorthand for already bailed out Ireland and Portugal, as well as weak states like Spain or Italy.

The report highlights that Greece’s destiny will likely be decided by what happens within the country as well as by outside conditions it has little influence over, such as global economic growth that would provide it with a better market for exports.

Those factors are likely to overshadow any decisions on a second bailout package, which merely buys Greece more time, and the exact nature of private-sector involvement, the main open issue in the debates on a new bailout.

Eurozone finance ministries are currently trying to come up with a way of getting banks and other private creditors to contribute to a new aid program. Since a forced restructuring _ or any move that would trigger a negative reaction from rating agencies _ has been ruled out, banks will likely commit to reinvesting some of the money they get back when their existing Greek bonds expire in new debt at somewhat lower interest rates.

However, several analysts have already pointed out that such a scheme would be very costly for Greece and will not reduce its overall debt load.

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NATO said Saturday it has begun ramping up its airstrikes on military targets in the western part of Libya, where rebel forces claim a string of advances through territory still largely under Moammar Gadhafi’s control.

In a boost for Gadhafi, meanwhile, the African Union called on member states to disregard an arrest warrant issued by the International Criminal Court against the Libyan leader. That could enable Gadhafi to travel freely on the continent. The warrant was issued for his alleged role in a brutal crackdown on anti-government protesters earlier this year.

Libyan government spokesman Moussa Ibrahim praised the AU’s decision, saying “we salute their courage.” He said Gadhafi had no immediate plans to leave the country, however.

“We are at war with the mightiest armies in the world, and the safety of the leader is a must for us. So we need to keep him safe to lead us through this difficult time,” he said.

Libya welcomed a road map for dialogue drafted by the AU that outlines plans for negotiations between the government and rebels, Moussa said.

He confirmed that Gadhafi would not be involved in the proposed talks, and expressed hope that a cease-fire could be reached “in the next few days, or weeks at most.”

Gadhafi’s regime is determined to stand firm against opposition fighters moving from southern and eastern fronts toward the capital, Tripoli. The rebels have largely solidified control over the eastern third of Libya but have struggled to push out of pockets they hold in the west.

NATO’s comments about its latest airstrikes suggest the alliance is hoping to tip the balance further in the rebels’ favor despite threats by Gadhafi to carry out attacks in Europe unless the airstrikes stop.

The coalition said it has destroyed more than 50 military targets in the west this week. It says it is targeting government forces in cities and along “major lines of communication.”

“We are engaging all military assets that are being used to indiscriminately target the civilian population throughout Libya,” Lt. Gen. Charles Bouchard, commander of NATO’s Libya mission, said in the statement sent Saturday but dated the previous day.

NATO said more than 1.8 million civilians are at risk from a buildup of forces loyal to Gadhafi in western cities along the coast and in the Nafusa mountain range southwest of the capital.

Rebels control several Nafusa mountain towns and the vital port city of Misrata. The rest of western Libya, including the heavily protected capital Tripoli, remain under Gadhafi’s control payday loans.

Col. Ahmed Bani, a rebel spokesman, said Saturday that rebel fighters have pulled back in some parts of the west, in what he described as a “strategic retreat,” but said they would go on the offensive again in the coming days. Asked about the NATO attacks in the area, he said they have been helpful to the rebels, but did not elaborate.

Bani told a news conference in the rebel-controlled eastern city of Benghazi that the rebels are not sending reinforcements to the west and that the fighters there don’t need more weapons.

A coalition including France, Britain and the United States began striking Gadhafi’s forces under a United Nations resolution to protect civilians on March 19, giving the rebels air support. NATO assumed control of the air campaign over Libya on March 31. It is joined by a number of Arab allies.

In recent days, NATO said it has repeatedly hit Tripoli and Gharyan, a city at the eastern gateway to the Nafusa mountains and on a major road to capital. Gharyan sits about 50 miles (80 kilometers) south of Tripoli.

It also claims to have struck a network of tunnels storing military equipment about 30 miles (50 kilometers) southeast of the capital.

NATO said in a separate statement it struck two armed vehicles Friday near Bir al-Ghanam, a town rebels from the mountains have been trying to take along a road leading toward the capital.

Gadhafi threatened Friday to target European “homes, offices, families” unless NATO halts its bombing campaign. His defiant audio address was played to thousands of supporters packed into Tripoli’s main square during on of the biggest pro-government rallies since the airstrikes began.

It’s not clear whether Gadhafi can make good on the threats.

In the past, the Libyan leader supported various militant groups, including the IRA and several Palestinian factions, while Libyan agents were blamed for attacks in Europe, including a Berlin disco bombing in 1986 and the downing of Pan Am Flight 103 over Lockerbie, Scotland, that killed 270 people, mostly Americans. Libya later acknowledged responsibility for Lockerbie.

In recent years, however, Gadhafi was believed to have severed his ties with extremist groups when he moved to reconcile with Europe and the United States.

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Former Missouri Gov. Roger Wilson is out as chief executive of Missouri Employers Mutual Insurance Co., the state’s largest workers’ compensation provider, and a search is under way to replace him.

Wilson had been on administrative leave since May 13.

The departure comes as MEM, which was created in 1993 by the Missouri Legislature to provide insurance for small businesses, faces turmoil over criminal charges filed against two former members of the insurer’s board of directors.

The Columbia, Mo.-based insurer issued a statement Thursday announcing its board of directors decided to make a leadership change, and Wilson is no longer employed by MEM.

Wilson, who lives in Columbia, joined MEM’s board in January 2009 and became its acting president in June 2009. He was named CEO in January 2010.

MEM is not disclosing why Wilson was on leave or why he was removed.

“Since this is a personnel matter, we will not be making any additional comments regarding Mr. Wilson,” MEM’s statement read.

In a separate statement, Wilson said he was proud of his work at MEM. “I wish them very continued success in building on the strong record we compiled together,” Wilson’s statement read. Through a spokesman, Wilson declined to comment further.

Wilson was lieutenant governor of Missouri for two terms, beginning in 1992. He became governor upon the death of Gov. Mel Carnahan in 2000 and served for three months.

MEM’s leadership has gone through a shake-up in recent months. Douglas Morgan, a longtime MEM board member who was named chairman last fall, was indicted in April on charges that he allegedly defrauded Commercial Bank of St. Louis and owes the bank $1.5 million. Morgan also was charged with wire fraud in connection with efforts to build a casino in the Spanish Lake area while he was chairman of the St. Louis County Planning Commission. Morgan, who was removed as MEM’s chairman and resigned from the board on May 30, has pleaded not guilty to the charges.

Attorney Jim Owen of Chesterfield succeeded Morgan as board chairman. Owen is now serving as interim president and CEO of MEM.

Owen said MEM is looking for a chief executive with insurance industry leadership experience and financial expertise.

“Obviously, we want to fill this position as quickly as possible,” Owen said Thursday.

Another former MEM board member, Karen Pletz, was indicted in March on embezzlement charges. Prosecutors allege Pletz fabricated documents over several years authorizing more than $1.4 million in payments from the Kansas City University of Medicine and Biosciences, while she was the school’s president. Pletz was fired from the medical school in 2009.

Pletz, who resigned from MEM’s board in March 2010, has pleaded not guilty to the charges.

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General Mills Inc.’s fiscal fourth-quarter net income rose 51 percent on stronger sales but was hampered by higher ingredient costs.

The Minneapolis-based maker of Cheerios, Lucky Charms and other foods also gave a 2012 earnings outlook below analysts’ expectations.

General Mills earned $320.2 million, or 48 cents per share, for the period ended May 29. That’s up from $211.9 million, or 31 cents per share, a year ago.

Adjusted earnings increased to 52 cents per share from 41 cents per share, meeting analysts’ forecasts.

Revenue climbed 3 percent to $3.63 billion from $3.53 billion, but missed Wall Street’s estimate of $3.66 billion.

The company saw its biggest sales gain in its Small Planet Foods organic and natural foods division, with its snacks and Yoplait divisions also reporting increased sales.

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French Finance Minister Christine Lagarde is expected to be chosen as early as Tuesday to be the new leader of the International Monetary Fund.

Lagarde would be the first woman to lead the lending organization. She would replace Dominique Strauss-Kahn, who resigned last month after being charged with sexually assaulting a New York City hotel housekeeper. Lagarde was opposed by Agustin Carstens, a Mexican central banker whose candidacy never caught fire, even among developing countries.

Lagarde has broad support in Europe payday loans guaranteed no fax. And a high-ranking Chinese official said Monday that Beijing supports Lagarde, according to several reports.

U.S. officials haven’t publicly backed any candidate. But most analysts expect the Obama administration to support Lagarde. Combined, the United States, Europe and China hold a majority of votes on the IMF’s board.

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