Thursday, March 24, 2011

“Distinctly pessimistic” European economic picture

Portuguese PM resigns, rockets hit Libya, oil prices soar and U.S. Congress demands to know "What is your benchmark for success?"

Brussels – On the first day of an economic summit, authorities are bracing for large protests by unions unhappy with new limitations on wage increases and a rising retirement age throughout Europe.

Oil prices topped $105 a barrel yesterday, the Portuguese Prime Minister resigned when he was unable to introduce austerity measures in an effort to close a budget deficit gap, and conservative Republicans pressed President Barack Obama to answer questions about a UN offensive against Libyan government troops fighting rebels to retain ownership of that country's oil fields.

Nervous Italian and Spanish government officials are watching the situation closely, fearing an economic collapse similar to that in Portugal.

Amid all these developments, analysts are calling the bond markets “distinctly pessimistic.”

This is because the European Stability Mechanism, the bailout fund, will be paid first before any privately underwritten debt, which makes those investments much riskier.

On that news, Portuguese ten year bonds closed up 0.10 of a percentage point at 7.63%, just short of record highs in the euro market, and Ireland's yield was 0.35 perentage point higher at 10.05%.

The consensus is that Portugal will be the third country to be bailed out, following Greece and Ireland.

Congress signaled disapproval of yet another mideast war front without prior approval.

House of Representatives Speaker John Boehner (R-OH) met President Obama at the foot of the accomodation ladder as he deplaned at Andrews Air Force Base on his return from South and Central America with a list of these questions amid growing criticism of the attacks on Libyan government forces in cooperation with UK and other European nations responding to a UN Security Council resolution to enforce a no-fly zone that will keep Libyan aircraft from attacking rebels attempting to overthrow the government and take the oil fields and refineries of the nation.

"It is regrettable that no opportunity was afforded to consult with Congressional leaders, as was the custom of your predecessors, before your decision as Commander-in-Chief to deploy into combat the men and women of our Armed Forces.”

- A United Nations Security Council resolution does not substitute for a U.S. political and military strategy. You have stated that Libyan leader Muammar Qadhafi must go, consistent with U.S. policy goals. But the U.N. resolution the U.S. helped develop and signed onto makes clear that regime change is not part of this mission.

- In light of this contradiction, is it an acceptable outcome for Qadhafi to remain in power after the military effort concludes in Libya? If not, how will he be removed from power? Why would the U.S. commit American resources to enforcing a U.N. resolution that is inconsistent with our stated policy goals and national interests?

-In announcing that our Armed Forces would lead the preliminary strikes in Libya, you said it was necessary to “enable the enforcement of a no-fly zone that will be led by our international partners.” Do we know which partners will be taking the lead?

- Are there clear lines of authority and responsibility and a chain of command? Operationally, does enforcement of a no-fly zone require U.S. forces to attack non-air or command and control operations for land-based battlefield activities, such as armored vehicles, tanks, and combatants?

- You have said that the support of the international community was critical to your decision to strike Libya. But, like many Americans, it appears many of our coalition partners are themselves unclear on the policy goals of this mission. If the coalition dissolves or partners continue to disengage, will the American military take on an increased role? Will we disengage?

- Since the stated U.S. policy goal is removing Qadhafi from power, do you have an engagement strategy for the opposition forces? If the strife in Libya becomes a protracted conflict, what are your Administration's objectives for engaging with opposition forces, and what standards must a new regime meet to be recognized by our government?

- Your Administration has repeatedly said our engagement in this military action will be a matter of “days, not weeks.” After four days of U.S. military action, how soon do you expect to hand control to these other nations? After the transition to coalition forces is completed, how long will American military forces remain engaged in this action? If Qadhafi remains in power, how long will a no-fly zone will be enforced?

- We are currently in the process of setting priorities for the coming year in the budget. Has the Department of Defense estimated the total cost, direct and indirect, associated with this mission? While you said yesterday that the cost of this mission could be paid for out of already-appropriated funds, do you anticipate requesting any supplemental funds from Congress to pay for ongoing operations in Libya?

- Because of the conflicting messages from the Administration and our coalition partners, there is a lack of clarity over the objectives of this mission, what our national security interests are, and how it fits into our overarching policy for the Middle East. The American people deserve answers to these questions. And all of these concerns point to a fundamental question: what is your benchmark for success in Libya?

This report compiled from wire reports and blogosphere notations in the rotation - The Legendary

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