I-Easter: August 2013

Monday 19 August 2013

U.S. pushes for more access to Japan auto, insurance markets

TOKYO (Reuters) - The United States urged Japan on Monday to open its auto and insurance markets more to foreign companies as the two countries pursue bilateral talks linked to a broader free-trade agreement that covers two-fifths of the globe. The United States hopes to make a proposal to Japan on its trade barriers in September, U.S. Trade Representative Michael Froman said, as part of a drive to reach a conclusion on the Trans-Pacific Partnership (TPP) free trade initiative by the end of the year.Reports that Japan's government is willing to phase out tariffs on 85 percent of goods under negotiations for the TPP are a "good initial step", Froman said, suggesting there was still a gap between the trading partners."The foreign share of the Japanese auto market is about 6 percent," Froman told a news conference."The foreign share of the U.S. auto market is closer to 40 percent. I don't think there is any question that the U.S. market is quite open."The U.S. government has long pushed for fewer tariffs on its cars and more access to Japan's insurance market but has met with little success.U.S. markets are some of the most open in the world, Froman said, suggesting there was not much that the United States could offer in return to the access that it was seeking.However, making it easier for foreign firms to do business in these two areas would increase Japan's productivity, contribute to its economic growth strategy and help secure progress in TPP negotiations, Froman said.Officials from the 12 countries in TPP talks will meet in Brunei from Thursday, but vested interests make it difficult to agree on lowering tariffs for agricultural products or barriers to industries that countries want to protect.Japan is under heavy pressure from farmers to resist cutting tariffs for products like rice.There is also resistance in Vietnam and Malaysia, where state-linked enterprises and selective handouts of government contracts are entrenched and politically sensitive.Froman, in Tokyo for talks with Japanese government officials, said it was natural for every country to have areas that they were sensitive about, but those areas should be dealt with in TPP negotiations.The United States is spear heading the TPP initiative, which includes Australia, New Zealand, Mexico, Canada, Chile, Peru, Malaysia, Vietnam, Singapore, Japan and Brunei, as part of a shift to focus more on Asia.China has said it is studying joining the TPP but it is not part of negotiations on the grouping.(Editing by Robert Birsel)

This article is taken from Reuters.com

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This article is taken from Reuters.com

Italy leads European shares lower on fear of new government crisis

* FTSEurofirst 300 down 0.6 pct, FTSE MIB down 2.5 pct * Threat of government crisis fuels profit taking on Italian shares* Morgan Stanley expects pullback of up to 10 pct as Fed tightensBy Francesco CanepaLONDON, Aug 19 (Reuters) - Italian shares led European bourses lower on Monday as reports of a rift opening up in Rome's coalition government triggered some profit taking on the region's best-performing index in the past month.Italy's FTSE MIB index fell 2.5 percent, as traders cashed in on its recent 14 percent rise, after reports that Silvio Berlusconi's centre-right party may withdraw its vital support from the government if he is expelled from the Senate following his recent conviction for tax fraud.Prime Minister Enrico Letta warned on Sunday that the collapse of his government would undermine the nascent economic recovery in Italy, which has helped the FTSE MIB outperform all other indexes in the region in the past month.Volume on the FTSE MIB was 126 percent of its 90-day average, compared to a meagre 73 percent for the pan-European FTSEurofirst 300, which fell 0.6 percent to 1,224.58 points."The market is betting that we're going to have a bout of uncertainty," said Ugo De Pasquale, an option trader with Qubed Derivatives."Italy needs the coalition government to stay in power. That's what the market is telling us."Italian lenders UniCredit and Intesa Sanpaolo shed 5.2 percent and 4.1 percent, their biggest daily losses since June after hitting six- and 18-months highs on Friday.Traders said a nearly 30 percent rally in Italian banking shares in the previous month, fuelled by some better-than-expected economic data against very low valuations, magnified the extent of the profit taking on Monday .Short interest in Intesa Sanpaolo and UniCredit, a gauge of interest from speculative sellers, was hovering around a one-year trough last week, Markit data showed, and the cost of insuring against future swings in both stocks recently hit its low for the year, showing sentiment around the shares was at its most bullish.Around Europe, Britain's FTSE 100 fell 0.5 percent, France's Cac shed 1 percent and Germany's Dax fell 0.3 percent.Investors were positioning for a reduction in the U.S. Federal Reserve's asset-purchase programme, which along with other, similar central bank schemes around the world has helped the FTSEurofirst 300 rise 30 percent since June 2012.Traders will look for hints on when the Fed might start cutting back its quantitative easing programme when the minutes of the July policy meeting are published on Wednesday."In the past, when markets started to price in a change in the monetary policy cycle, you tended to see a pause in the market or a bit of a correction," said Ronan Carr, a strategist at Morgan Stanley, who expected European indexes to pull back as much as 10 percent in the near term."It doesn't necessarily derail the favourable outlook which is defined by improving growth but we think it will cause some indigestion in the near term."

This article is taken from Reuters.com

Key Euribor rate steady as ECB rate cut hopes dim

FRANKFURT (Reuters) - The key Euribor bank-to-bank lending rate held steady on Monday as expectations of an ECB interest rate cut faded after data last week showed the euro zone exited recession in the second quarter. Stronger growth in the euro zone's two largest economies, Germany and France, helped the currency bloc emerge from its longest recession to date in the April-June period, supporting the European Central Bank's expectation for a fragile recovery.The improved economic outlook has led to a rise in short-term money market rates, as investors see less reason for the euro zone's central bank to cut interest rates from their record low of 0.50 percent any time soon.Money markets are pricing out expectations of another ECB rate cut.On Monday, the three-month Euribor rate, traditionally the main gauge of unsecured bank-to-bank lending, was unchanged for the third session running at 0.226 percent.The six-month Euribor rate was also unchanged, at 0.342 percent, while the one-week rate stayed at 0.101 percent. The overnight Eonia rate edged up to 0.078 percent from 0.077 percent.Dollar-priced bank-to-bank Euribor lending rates were mixed, with three-month rates dipping to 0.49833 percent from 0.50000 percent and one-week rates unchanged at 0.30333 percent.Excess liquidity in the euro zone banking sector stood at 258 billion euros, still high enough to keep short-term market rates below the ECB's refinancing rate.The ECB said in its July monthly bulletin that as long as excess liquidity "remains above a certain threshold, estimated to be in the range of 100 billion to 200 billion euros, short-term money market rates are expected to stay slightly above the deposit rate".The ECB's main refi rate is at 0.5 percent and the deposit rate at zero.(Reporting by Frankfurt newsroom; Editing by Catherine Evans)

This article is taken from Reuters.com

Los Angeles mural by graffiti artist Banksy up for auction

LOS ANGELES (Reuters) - A mural by British graffiti artist Banksy that was painted on a Los Angeles gas station wall will be auctioned off in December and is expected to fetch upwards of $150,000, Julien's Auctions said on Monday. The mural, entitled "Flower Girl," was painted on the brick wall of a gas station in 2008. Measuring 9 feet by 8 feet, the mural shows the silhouette of a girl looking up at a closed-circuit television camera sprouting from a vine.It is estimated to fetch between $150,000 and $300,000 as Banksy has become a coveted contemporary artist."Banksy is not only provocative, but quite entertaining. It makes it quite fun to offer his art along with so many other great artists of our time," Martin Nolan, executive director of Julien's Auctions, said in a statement."Flower Girl" is the only mural on the block on December 5 in Beverly Hills, California, as part of Julien's Auctions "Street Art" collection. Other works in the lot include canvases and paper pieces by street artists such as Risk, Indie 184 and MearOne.Banksy is a pseudonym for an elusive British graffiti artist who first emerged in Bristol, England, as part of an underground group of artists. He has become known for his trademark spray-paint stencils that offer social commentary.He intentionally hides his identity and real name, but verifies his works by featuring them on his website (www.banksy.co.uk). Banksy appeared in the 2010 Oscar-nominated documentary "Exit Through the Gift Shop" with his face obscured and voice altered.Since the artwork was painted on private property, the artist is not entitled to any profits from a subsequent sale, said Michael Doyle, the consignments director for Julien's Auctions.Doyle said the auction house was contacted by the seller, whose identity is being kept confidential. Doyle added that the sale had been cleared by the owner of the gas station, who had the section of the wall displaying the artwork removed.Earlier this year, two spray-painted murals by Banksy were pulled from an auction in Miami, including one entitled "Slave Labour." Questions arose about the ownership of "Slave Labour" and how the auction house obtained it."Slave Labour" eventually sold at a private auction in London for $1.1 million in June.(Reporting by Piya Sinha-Roy; Editing by Eric Kelsey and Stacey Joyce)

This article is taken from Reuters.com

Spain's El Corte Ingles in 3.8 billion euro debt refinancing deal

MADRID (Reuters) - Spanish department store El Corte Ingles, the country's largest privately held company, said on Monday it had reached a deal to refinance three quarters of its 5 billion euro ($6.7 billion) debt. El Corte Ingles, one of Spain's largest employers and most venerable retailers, has been hit by austerity and falling sales and has cut prices to compete with cheaper retailers, particularly in the food sector.The chain said in a statement it had agreed with lenders Santander (SAN.MC), BBVA (BBVA.MC), CaixaBank (CABK.MC), Sabadell (SABE.MC), Popular (POP.MC) and Bankia (BKIA.MC) to refinance 76 percent of its debt, or 3.8 billion euros. The new loans will mature in 2021.El Corte Ingles also said assets worth 7.4 billion euros and annual revenues of around 15 billion euros would help it persuade other banks to refinance the remainder of its debt.(Reporting by Julien Toyer; Editing by David Cowell)

This article is taken from Reuters.com

Indian rupee falls to record low; bond yields hit five-year high

MUMBAI (Reuters) - The rupee hit a record low on Monday as India's defense of the currency failed to stop its decline but exacted a rising toll, with bond yields surging to five-year highs and investors demanding higher returns in an auction of cash bills. The partially convertible rupee tumbled as far as 63.30 to the dollar despite measures in recent weeks by the central bank and government to defend it. It ended at 63.13/14, down 2.3 percent, its biggest single-day fall since September 22, 2011.Efforts to prop up the currency, which has tumbled nearly 13 percent against the dollar this year, have thus far proved ineffective, making it the worst performer in emerging Asia and threatening to drive the region's third-largest economy towards a full-blown crisis.In a further threat to the already-slowing economy, the central bank's effort to shore up the currency by draining liquidity from financial markets is pushing up market interest rates.Axis Bank (AXBK.NS) on Monday became the latest lender to raise its minimum lending rate by 25 basis points, to 10.25 percent, pushing up the cost of home and auto loans."Our primary concern is that the policy authorities still don't 'get it' - thinking this is a fairly minor squall which will simmer down relatively quickly with fairly minor actions," Robert Prior-Wandesforde, an economist at Credit Suisse, wrote in a note on Monday."If this remains the case, then a swift move to 65 against the U.S. dollar is probable, which in turn should help focus minds."While India's current crisis has evoked parallels to 1991, when it had to pledge gold to the International Monetary Fund, the World Bank's chief economist on Monday said such comparisons were unwarranted and India need not seek a credit line from the IMF. [ID:nD8N0G901T]"Several people have come to me (asking) are we back to 1991? That is completely a non-question because if you look at a couple of numbers there is absolutely no comparison," Kaushik Basu, a former senior Indian government official now at the World Bank, said in New Delhi.A record-high current account deficit of 4.8 percent of gross domestic product (GDP) in the last fiscal year has made India particularly vulnerable as funds leave emerging markets in expectation that the U.S. Federal Reserve will soon scale back its quantitative easing.Net outflows from Indian bonds and stocks total $11.4 billion since late May. Still, India has reserves to cover about seven months of imports, compared with just three weeks in 1991.India's bond market has borne the brunt of the outflows, with foreigners taking out around $10 billion since May 22. The benchmark 10-year bond yield surged 35 basis points on the day, to 9.23 percent.Equity markets have remained relatively insulated with outflows from the cash market at less than $100 million on Friday, when the main stock benchmark fell about 4 percent, the most in nearly two years. Heightened selling in equities could exacerbate the rupee's fall, dealers said.Mumbai's main stock index .BSESN fell 1.6 percent on Monday. .BORUPEE SWOONSThe cost of insuring debt of State Bank of India (SBI.NS), a proxy for Indian sovereign debt, jumped on Monday to 14-month highs as the rupee plunged. Five-year credit default swaps (CDS) on SBI traded at 351 basis points, a 45 bps rise from Friday's close, data provider Markit said.Continued dollar demand by banks and oil refiners contributed to the rupee's latest fall, dealers said.Some dealers expect further dollar selling by the Reserve Bank of India (RBI) as well as other measures to support the currency. On Monday, however, traders said they did not see any noticeable central bank dollar selling.Traders seemed unconvinced about the efficacy of steps unveiled last week to cut the current account deficit to 3.7 percent of GDP during the current fiscal year."Forex intervention will continue by the central bank. Further measures are expected from the RBI but are unlikely to be effective. The rupee is expected to touch 63 in no time," said Param Sarma, chief executive at Brokerage NSP Forex.Finance Secretary Arvind Mayaram told Monday's Economic Times that the government was not looking for now to take further steps to tackle the rupee's fall, but wanted to see the impact of its recent measures. (link.reuters.com/fub52v)The rupee's tumble has fuelled expectations of more action from the RBI, which last week curbed outflows from companies and individuals, roiling stock and bond markets.YIELD SURGEThe yield on India's 10-year benchmark government bond climbed as high as 9.26 percent, its highest since August 1, 2008, before the Lehman Brothers collapse.The RBI set a cutoff of 12.2370 percent on 28-day cash management bills on Monday. It had sold 35-day paper at 11.7056 pct last week."The priority is clearly rupee management. Pressure will rise on the fiscal side with yields rising, but the government can compress expenditure later," said Anjali Verma, economist at PhillipCapital in Mumbai.Many economists believe the RBI's liquidity tightening will stay in place longer than initially expected, and many have cut their economic growth forecasts for the current fiscal year.India's economy grew at a decade-low 5 percent in the last fiscal year, and some economists now see little improvement on that in the current year, as political gridlock ahead of national elections due by May limits New Delhi's ability to enact structural reforms to attract long-term inflows.(Additional reporting by Umesh Desai in HONG KONG, Rajesh Kumar Singh in NEW DELHI, and Sujata Rao in LONDON; Editing by Tony Munroe and Nick Macfie)

This article is taken from Reuters.com

Walker Evans' Depression-era photos revisited in New York exhibit

NEW YORK (Reuters) - From a photograph of an Alabama cotton picker's wife to scenes of urban poverty, the photographs of Walker Evans, on display in a new exhibit at New York's Museum of Modern Art (MoMA), shaped Americans' view of the Great Depression. The exhibit, which runs through January 26, 2014, marks the 75th anniversary of Evans' one-person photography exhibit, the first in MoMA's history.It also coincides with the publication of an anniversary edition of his landmark book, "American Photographs.""Evans was one of the most influential artists of the 20th century," said Sarah Meister, the exhibit's curator. "His cool, pure vision revealed photography's lyric potential and inspired generations of photographers and other visual artists."To help illustrate his influence, near the hall featuring Evans' photographs are galleries showing works by artists Robert Rauschenberg, Jasper Johns, Jackson Pollock and Andy Warhol."The placement underscores the connection between prewar avant-garde practices in America and the legacy of Evans' explorations of signs and symbols, commercial culture, and the experience of ordinary Americans," Meister said.The exhibit is comprised of about 60 prints from the museum's collection that were included in the 1938 exhibition and book.It features "Alabama Cotton Tenant Farmer's Wife, 1936," a photograph that gazes out from the history textbooks of American high school students, evoking the bleak existence of agricultural workers in places where crop prices plummeted and the soil turned to dust."Poverty, rural and urban poverty, indigenous architecture, the automobile culture, movies - Evans found all of these subjects very interesting and he photographed them repeatedly in different ways before 1938," Meister said.In "Sidewalk and Shopfront, New Orleans, 1935," a woman stands in a barber shop doorway, the stripes on her dress subtly connecting with those on the traditional barber shop pole."Negro Barber Shop Interior, Atlanta, 1936" is absent of customers, leaving the viewer to wonder who might be about to enter the shop or to contemplate the still life of the barber's chairs and accoutrements."Alabama Tenant Farmer Family Singing Hymns, 1936" prompts the viewer to wonder how the individuals in the picture felt about religion.The titles of the photos in the exhibit, all taken in the midst of the Great Depression that began in 1929 and endured until the early 1940s, are slightly separated from the pictures, giving viewers more room to interpret the photos for themselves."When these photographs were first put forward in 1938, many had been made in the previous two or three years. They depicted a very specific, but also very fresh, perspective on what an American photograph was and, you might argue, on what America was," Meister said."Now one sees them through the lens of history and yet, 75 years later, these pictures resonate with audiences."(Reporting by Ellen Freilich; Editing by Patricia Reaney and Vicki Allen)

This article is taken from Reuters.com

Lloyds readies sale of German insurer: source

LONDON (Reuters) - Lloyds Banking Group (LLOY.L) is readying a sale of its German life insurance business, a source with knowledge of the matter said, as the British state-backed bank exits overseas markets to focus on lending at home. Lloyds could raise around 400 million euros ($533 million)from the sale of Heidelberger Leben, the source said, with German reinsurer Hannover Re (HNRGn.DE) tipped as the most likely buyer.The government is preparing to start selling its 39 percent stake in Lloyds, acquired as part of a bailout during the 2008 financial crisis, after the shares surged above its breakeven price of 61 pence.Lloyds' German insurance sale, which the source said could be announced as early as this week, follows the disposals of its $5 billion U.S. mortgage book, Spanish retail banking operations and international private banking business.The bank has been trying to sell Heidelberger for at least two years but struggled to find a buyer. When the insurer was put up for sale in 2011 it was reported to have an embedded value - an insurance-specific valuation measure - of 1 billion euros.Lloyds aims to halve its non-core loan book by the end of 2014 from 141 billion at the end of 2011.Lloyds, Heidelberger and Hannover all declined to comment.(Reporting by Laura Noonan in London and Alexander Huebner in Frankfurt; Writing by Tommy Wilkes; Editing by Carmel Crimmins and Erica Billingham)

This article is taken from Reuters.com

Employment gains falter in U.S. states

WASHINGTON (Reuters) - Jobless rates dropped in only eight states in July from the previous month and rose in 28, the Labor Department said on Monday, as employment gains sputtered. The slight improvement in employment last month came after jobless rates fell in only 11 states in June from May.From July 2012, unemployment rates decreased in 36 states and the District of Columbia and increased in nine, the department said.For much of the last year, the majority of states have registered drops in monthly jobless rates. In May, rates dropped in 25 states and in April they fell in 40 states and Washington, D.C.Nationally, the jobless rate fell to 7.4 percent in July, the lowest level since December 2008, largely due to people giving up on the job hunt and dropping out of the work force.States point to the recent ebbs and flows in the labor force as a reason for their jobless rate swings, along with hemorrhaging public service employment and fluctuating education jobs.Mississippi had the largest drop in unemployment last month, to 8.5 percent from June's 9 percent."The unemployment rate has been dropping since February in Mississippi. It's just been little changes," said Chief of Labor Market Information Mary Willoughby, noting that over the same time period, the state's labor force has shrunk as well.In neighboring Alabama, where the rate dropped to 6.3 percent from 6.5 percent in June, the labor force also shrank. While manufacturers in the state gained jobs, total employment "plunged this month, dropping by 14,700," according to Alabama's labor department, with most losses in construction, educational and health services, leisure and government.Conversely, Virginia pointed to an expanding labor force as the reason its jobless rate rose to 5.7 percent in July from 5.5 percent in June. At the same time, local governments' elimination of 4,500 jobs created a drag, with nonfarm employment increasing by 1,400 jobs last month, according to the Virginia employment department.In Montana, Utah, North Dakota, Hawaii, Nevada and New Jersey, the jobless rates edged down 0.1 percent.Nevada again had the highest jobless rate of all states in July, at 9.5 percent, followed by Illinois at 9.2 percent. North Dakota continued to have the lowest rate, at 3 percent.New Jersey lost the most jobs, 11,800, followed by Nevada at 10,200.The number of jobs filled in July rose in 32 states and decreased in 17 states and the District of Columbia. Employment was unchanged in South Dakota, while California gained the most jobs, with 38,100 new positions.It was followed by Georgia, which added 30,900 jobs, although Georgia was also one of the states where the jobless rate ticked up, to 8.8 percent from 8.5 percent in June."The rate increased primarily because there was a significant number of new layoffs, and non-contract school employees remained unemployed because of the summer break," State Labor Commissioner Mark Butler said in a statement. "However, the vast majority of the layoffs were temporary, and the school employees are beginning to return to work."(Reporting By Lisa Lambert; Editing by Michael Connor; Editing by Dan Grebler)

This article is taken from Reuters.com

Fannie, Freddie should recognize bad loan costs immediately: watchdog

WASHINGTON (Reuters) - Fannie Mae and Freddie Mac are masking billions of dollars losses because of the level of delinquent home loans they carry, a federal watchdog said in an internal report, and it said the companies should be required immediately to recognize the costs of some bad mortgages. The report, written by the inspector general for the Federal Housing Finance Agency and reviewed by Reuters, said the FHFA's timeframe for mortgage finance companies Fannie (FNMA.OB) and Freddie (FMCC.OB) to have up to two years to recognize the cost of mortgages delinquent at least 180 days was "inordinately long."The change in the accounting treatment of these delinquent loans potentially could require Fannie and Freddie, which have rebounded to enormous profitability in the past two years as the housing market recovered, to "charge off billions of additional dollars related to loans," the inspector general's report stated.The FHFA, which regulates Fannie Mae and Freddie Mac, said the two are on track to implement the new standards within the next two years, and in a letter sent to the inspector general said it views the potential losses "to be reasonable."Fannie Mae and Freddie Mac were seized by the U.S. government in September 2008 as rising mortgage losses threatened them with insolvency. The mortgage companies have cost taxpayers almost $188 billion to stay afloat.The majority of Fannie Mae and Freddie Mac's losses are a result of guaranteeing mortgages that defaulted during the housing crisis. Fannie and Freddie have reduced their funds reserved to cover potential losses on bad loans due to the strengthening housing sector and higher home prices.The FHFA noted the new accounting methods would involve "changes in a significant policy," and as a result require a lengthy implementation period. The regulator consulted with Fannie Mae and Freddie Mac and has allowed the mortgage companies until January 1, 2015, to make all of the adjustments, which will be rolled out in stages.The inspector general's office said in the report, dated August 2, that Fannie and Freddie have not publicly disclosed the accounting changes.The report called on the FHFA to require Fannie and Freddie to conduct the changes at a faster pace, with the inspector general primarily concerned with loss estimates that are realized in Fannie and Freddie's public financial statements.Fannie Mae on August 8 reported a $10.1 billion profit for the second quarter and said it would send a $10.2 billion payment to the U.S. Treasury for its federal aid. It was the sixth straight profitable period for the company and compares with a $5.1 billion profit for the year-earlier quarter.For the second quarter, Freddie Mac posted its second largest ever quarterly profit, reporting net income of $5 billion, and said it would make a $4.4 billion dividend payment as part of the reimbursement for its rescue aid.Work on the accounting changes began in April 2012. At that time, Fannie and Freddie were asked by the FHFA to provide an initial implementation plan and to take a closer look at new asset classifications, according to the FHFA's letter.Both companies submitted the implementation plans by October 2012, the letter stated. During that time, FHFA did its own analysis on Fannie and Freddie's 180-day delinquent loans' performance and found the "financial impact to be reasonable."(Reporting by Margaret Chadbourn; Editing by Leslie Adler)

This article is taken from Reuters.com

Rupee, rupiah lead emerging market slide on Fed fears

MUMBAI/JAKARTA (Reuters) - India's rupee crashed to a record low and the Indonesian rupiah hit a 4-year trough on Monday, as the expected withdrawal of U.S. monetary stimulus prompts investors to shun emerging markets burdened by weak external balances, slowing economies and inflation. It followed a slide on Friday in Brazil's real, a currency that, like the rupee, has been hammered by investor doubts that actions taken by monetary authorities last week will prove effective in stemming the sell-off."Our primary concern is that the policy authorities still don't 'get it' - thinking this is a fairly minor squall which will simmer down relatively quickly with fairly minor actions," Robert Prior-Wandesforde, an economist at Credit Suisse in Singapore, wrote in a note on the Indian currency on Monday.Growing expectations that the U.S. Federal Reserve will start scaling back its bond purchases as early as next month, slowing the flow of cheap money into higher yielding overseas assets, have weighed on many emerging markets.The currencies of countries already struggling with wide current account deficits, such as India and Indonesia, are seen as among the most vulnerable to sudden capital flight and have been hit hardest."The market is still acting on the negative current account and fiscal deficits," said Nizam Idris, a strategist with Macquarie Capital, when asked about the two Asian laggards.The latest blow for Indonesia's currency was delivered by central bank data released late on Friday that showed the current account deficit grew to 4.4 percent of GDP in the second quarter of the year, from 2.4 percent in the previous quarter."Although the current level of reserves is still equivalent to a reasonably healthy 5.5 months of imports, the Bank can't continue to burn reserves at the current rate without the market worrying about a 'crisis' scenario unfolding," Credit Suisse said in a note.Indonesia's Finance Minister Chatib Basri said he was not worried by the rupiah weakness and predicted the current account deficit, though it would remain into next year, would narrow.'TAPERING' THREATSome analysts predicted the weakness could ripple out to other Asian markets, with Malaysia's current account data due on Wednesday likely to be closely watched.India's tumbling currency has been the worst performer in Asia since late May, when the Fed first signaled that it may begin "tapering" its monetary stimulus this year.Indian policymakers are grappling with a record current account deficit at 4.8 percent of GDP - and market participants aren't convinced the government can reduce the gap to a targeted 3.7 percent this financial year.The Reserve Bank of India (RBI) has been selling dollars to support the rupee and last week announced curbs on outflows from companies and individuals, denting stock and bond markets."Forex intervention will continue by the central bank," said Param Sarma, chief executive at Brokerage NSP Forex. "Further measures are expected from the RBI but are unlikely to be effective."Brazil's central bank has also intervened to try and reassure investors, but could not prevent the real from sinking on Friday to its lowest level since the depths of the global financial crisis in 2009.The real's poor record during previous bouts of market volatility and its steep gains over the past decade are some of the reasons why it is now seen as a risky trade - a "high beta" currency in the jargon of the foreign exchange markets.Domestic concerns have also made things worse.As with India, a previously fast-growing economy has slowed, disappointing investors. Also, like Indonesia, a cooling in China's appetite for its commodities exports has resulted in a sharp deterioration in its balance of trade.(Additional reporting by Jongwoo Cheon and Vidya Ranganathan in Singapore and Walter Brandimarte and Tiago Pariz in Rio de Janeiro; Writing by Alex Richardson; Editing by Richard Borsuk)

This article is taken from Reuters.com

Residents in path of rapidly growing Idaho fire urged to get out

(CNN) -- The message Saturday from fire officials to hundreds of people in the path of a wildfire burning in Idaho's Wood River Valley: Pack up your essential belongings, your pets and go.

Resident Robert Cole didn't need any further encouraging to get out of the way of the blaze, dubbed the Beaver Creek Fire, that swelled significantly -- and dangerously -- over the course of the day.

"I've seen enough disaster in my life... But never any fire that threatened my home," Cole said, looking toward a glowing ridge.

Photos: 'Wall of fire' threatens homes

Somewhere in that area, he knew firefighters were working to save homes

"I hope like hell they are safe," Cole said.

A helicopter drops fire retardant to protect homes outside Ketchum, Idaho, from the Beaver Creek Fire on Sunday, August 18. The fire has forced the evacuation of several neighborhoods.

Idaho wildfires

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Photos: Idaho wildfires

The fire grew from 64,000 acres on Friday to nearly 93,000 on Saturday, pushed in large part by strong winds, low humidity and dry brush, according to the U.S. multi-agency fire response website InciWeb.

Firefighters have been unable to corral the blaze that was ignited by a lightning strike on August 7 northwest of the town of Hailey. It was just 9% contained by Saturday evening -- up slightly from the 6% containment it had been for most of the day -- said Meghan Stump of the fire information office.

Mandatory evacuation orders grew from 1,600 homes to more than 2,200 homes by late Saturday afternoon.

Those areas include parts of the towns of Hailey and Ketchum, as well as Greenhorn Gulch, Deer Creek, Golden Eagle and Timber Gulch.

What to know about wildfires

"Out in Deer Creek and Green Horn, we got our butts kicked," the Blaine County Fire Chief Bart Lassman told 500 residents gathered Saturday afternoon at a community meeting in Hailey, according to CNN affiliate KTVB.

Hot shot teams and fire engine crews were awakened at 2:30 a.m. local time to battle the fire making a run at homes, Tracy Weaver, a fire public information officer, told KTVB.

"Firefighters are making a valiant stand," she said.

The fire has destroyed at least one home and damaged several others, according to InciWeb. It also destroyed a bridge that had connected the Idaho communities of Ketchum and Fairfield, according to Stump.

As of Saturday evening, there were no reports of injuries stemming from the blaze, she said.

Still, the danger is real, which is why the Blaine County Sheriff's Office said Saturday afternoon there was a "high probability" of even more evacuations to come in West Ketchum. Residents of the cities of Ketchum and Sun Valley -- home to a well-known ski resort -- are under a pre-evacuation notice.

"Begin preparations now so that you can leave immediately should conditions deteriorate," the sheriff's office warned.

More than 1,000 personnel are involved in fighting the fire, which was sparked by lightning on August 7. Authorities said Highway 75 was intermittently closed due to fire, smoke and firefighting operations.

The Idaho National Guard also has been called in to help,

Gov. Butch Otter has issued a disaster declaration and ordered the Idaho National Guard to provide support for firefighting efforts.

The governor warned people to obey the evacuation orders.

"Those folks' job is to fight fire, not rescue people, and evacuate them after they were told to do it, and refused to do it," Otter told KTVB. "I understand you want to protect your property. But, I will guarantee you that nobody is going to go out of their way to get you out of your house, if it isn't necessary."

This article is taken from CNN.com

China's Bo Xilai: From rising star to scandal

Beijing (CNN) -- In a country where the image of Mao Zedong is still revered and taxi drivers hang Mao medallions from their rear-view mirrors almost like lucky talismans, Bo Xilai's 'red culture' revival was always going to have traction.

In the sprawling riverside megalopolis of Chongqing, the charismatic and urbane politician Bo launched a "smash black, sing red" campaign that promoted Chinese communist culture as zealously as it cracked down on organized crime.

From June 2009, Bo led a law and order drive that resulted in the arrest of thousands of suspected gangsters, but critics claim it also targeted his political adversaries.

The crackdown may have thrilled many in Chongqing's massive municipality of 32.8 million people -- almost four million of whom are rural migrant workers seeking work in the urban center -- but Bo's law-and-order campaign touched on one of China's growing social and political fault lines.

Bo Xilai prepares for corruption trial

Politician's wife charged with murder

Will scandal bring change to China?

Infighting in Chinese Communist Party

While many are becoming fabulously wealthy in the new China, millions more feel they are missing out on the country's economic transformation.

Bo's red-tinged economic policies -- which have included millions spent on social housing -- may have garnered him a rock star status in Chongqing, but almost 1,000 miles from the Yangtze River city in Beijing, some party chiefs were taking a different view.

His populist policies and high-profile personal style were seen as a challenge to the economically liberal and reform-oriented faction within the Chinese Communist Party (CCP).

The division emerged in the famous "cake theory" spat between Bo and Guangdong party chief Wang Yang in 2011.

Wang at the time stated that China needed to pursue economic growth before it could worry about how to divide the wealth, saying that "one must bake a bigger cake first before dividing it."

Bo was said to have responded: "Some people think [...] that one must bake a large cake before dividing it; but this is wrong in practice. If the distribution of the cake is unfair, those who make the cake won't feel motivated to bake it." Political analysts say the spat, which was widely aired on Chinese media last year, drives to the heart of the factional problems besetting the CCP.

The political divisions came to a boil in March 2012, when China's national legislature convened its annual meeting in Beijing.

Speaking to reporters on March 9 on the sidelines of a panel discussion of Chongqing delegates, Bo defended his policies. "Ask any citizen on the street if they support fighting corruption and they'll say 'yes'," he boomed. Addressing the rich-poor divide, he said: ''If only a few people are rich then we are capitalists, we've failed."

That may have been Bo's last stand.

Timeline: Bo's fall from grace

Bo Xilai's wife arrested in Briton death

Probing China's political drama

Bo Xilai insider goes public

A few weeks earlier, Wang Lijun, his handpicked former police chief, had tried to defect to the U.S. consulate in the neighboring Sichuan city of Chengdu, triggering a political crisis that rocked the leadership in Beijing.

On March 14, Premier Wen Jiabao obliquely reprimanded Chongqing's leadership over the Wang incident during the premier's annual press conference. Wen also refered to the damage wrought by the Cultural Revolution - a reference that alluded to Bo's red revival in Chongqing - and said that the city's stellar double-digit economic performance had been the fruits of several administrations and not just Bo's work alone.

On March 15, the state-run Xinhua news service announced that Bo had been dismissed as Chongqing party chief and, almost a month later, he was suspended from the CCP's Central Committee and its Politburo-- the second-highest decision-making body in China -- ahead of investigations for "serious disciplinary violations."

Bo's dismissal is the most sensational political scandal to hit the Chinese Communist Party in recent years.

As a "princeling" - a son of a revolutionary veteran -- Bo was considered a strong contender for promotion into the Standing Committee of the party's Politburo, whose nine members decide how to run China.

But then, things were always likely to be different for the maverick cadre.

His father Bo Yibo, who had a similar relaxed and open style, was imprisoned and tortured during the Cultural Revolution as a "capitalist roader."

His credentials as an economic reformer were cemented during the 1980s when he famously visited the Boeing factory in the United States. Seeing just two planes on the tarmac, Bo senior asked if they were the only planes the factory planned to produce. When he was told that Boeing only made the planes that were on its order books, he immediately saw the problems of China's planned economy which produced goods regardless of whether there was a market or not.

Bo Xilai himself spent five years in jail during the Cultural Revolution and was said to have denounced his father during the tumultuous political upheaval -- an action that some argue may have cost him political allies in a culture that strongly values family ties.

After his release, Bo entered Peking University's history department in 1977 and two years later, after gaining a degree, Bo got into the master's degree program in journalism, the first ever, at the Chinese Academy of Social Sciences.

"His top ambition then was to be a Chinese journalist posted overseas," recalls a classmate and close friend of Bo.

He shows too much personality and charisma in the post-Mao political culture that emphasizes collective leadership.
Wenfang Tang, a political science professor at the University of Iowa

After graduation, however, Bo did not pursue his ambition to become a foreign correspondent. Instead, he worked his way up as a local party and government official.

He spent 17 years in Dalian, a charming but gritty coastal city in northeastern China. He became Dalian mayor in 1993 and transformed it into a popular investment and tourism destination.

As early as 1999, Bo was expected to move to Beijing for a ministerial post but his promotion was aborted when he failed to get elected into the Central Committee, the Communist Party's ruling elite.

Bo served as the governor and later party chief of Liaoning, a rust-belt region in northeast China which then boasted of large but mostly money-losing state-owned enterprises. In Liaoning, Bo dealt with high unemployment and endemic corruption.

In 2004, when Bo finally got elected into the elite Central Committee, he moved to Beijing as minister of trade and commerce.

"He was a tough and effective negotiator in terms of defending China's global trade policies and interests," said Wenran Jiang, a professor at the University of Alberta and Bo's former classmate at Peking University.

For decades, Jiang recalled that Bo stood out as one of China's most dynamic and maverick politicians. Instead of reading prepared speeches, for example, he often spoke extemporaneously.

"He would have had a chance to become China's top leader, if China had direct elections. But he shows too much personality and charisma in the post-Mao political culture that emphasizes collective leadership," said Wenfang Tang, a political science professor at the University of Iowa.

During Bo's anti-corruption crackdown, Bo relied mainly on Wang Lijun, a tough and decorated policeman who served as Chongqing's police chief from 2009 to 2011.

The campaign led to thousands of arrests and several executions. Wang was promoted to vice mayor as a reward.

Wang Lijun fled to the U.S. consulate in Chengdu in February.

Ironically, it was also Wang who torpedoed Bo's career.

On February 8, 2012, Wang was unexpectedly reported to be "on leave" for health reasons. Days later, Wang mysteriously fled into the U.S. consulate in Chengdu, six hours' drive away from Chongqing.

The next day, Wang left the consulate "of his own volition," U.S. officials said, and was taken into custody by security officials. His revelations led to a murder investigation involving Bo's family.

In April of the same year, Bo's wife Gu Kailai and a family aide, Zhang Xiaojun, were detained on suspicion of having murdered British businessman Neil Heywood.

During her one-day trial that August, Gu issued a statement saying she didn't deny the accusations levied against her, but "accepted all the facts written in the indictment" -- including poisoning Heywood at a time when she thought her son's life was in danger, according to the state-run Xinhua news agency.

Gu received a suspended death sentence, which is expected to be commuted to life in prison after two years. Zhang was sentenced to nine years in prison.

A year later, Bo, now stripped of his party positions and membership, faces his own trial on August 22, on charges of bribery, corruption, and abuse of power.

This article is taken from CNN.com

Drawing cartoons empowers teen with mental disorders

Editor's note: This story is part of CNN's American Journey series, showing how people are turning passions into jobs. Share your story with CNN iReport, and you could be featured in a CNN story.

(CNN) -- On the surface, Zack Hix is like many 18-year-olds.

The Simpsonville, South Carolina, teen's favorite foods are cheeseburgers and pizza. He listens to rock and punk music. He loves to race mountain bikes, play video games, watch Georgia Bulldogs football with his dad and -- perhaps most importantly -- draw.

But Zack also suffers from a laundry list of mental health issues, including both intermittent explosive- and obsessive-compulsive disorders, which make him different from other kids his age and threaten to inhibit his ability to function as an independent adult.

Zack is diagnosed with attention deficit hyperactivity disorder, anxiety and depression, in addition to the IED and OCD. He also has Tourette syndrome and tics that are the result of a Pediatric Autoimmune Neuropsychiatric Disorders Associated with Streptococcal Infection in the fifth grade.

Artistic self-expression through drawing helps to balance Zack's struggles. Together, the Hix family is on a journey to turn a series of Zack's characters into a career as a cartoonist.

"If we can make a go of this and he can work for himself doing what he loves to do -- chances are he is not going to be able to work in a traditional setting; they're so up and down with how they function -- maybe he can support himself after high school and not have to sit back and collect disability as a person who cannot hold a job," his mother, Kim Hix, said.

The Good Boy Roy crew -- including Roy, Zman and Rocker Rick -- are charismatic, athletic and musically talented. They are likenesses of Zack and those close to him. Life's joys and tribulations also inspire Zack's art, whether it's expressing his faith in God, standing up to bullies or maintaining a positive outlook on life.

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"The images come to my head," he says. "I just capture them and put them on paper."

'I know that it is the illness'

Kim Hix, 46, is the president of Good Boy Roy, in addition to her roles as part-time personal trainer, an advocate for children in court proceedings and, of course, full-time mother.

"When Zack does awful things, I know that is the illness," she says. "He is so loving and sweet and thinks of others."

She knew early on that Zack was different, she says. He wouldn't sleep alone, screamed to the point where she thought he was going to hurt himself and had trouble processing the reasons he was disciplined.

The family had no history of mental disorders, so Kim Hix started taking Zack to doctors.

"We didn't know what to think," she says. "We were kind of bewildered."

Zack's father, Doug Hix, says it sometimes feels like they are isolated and on an island, but points out that many people have it worse.

Kim Hix says Zack's struggles continue to affect the family, especially Kelsie, 14.

"None of this is in your control really," says Kim. "You can't fix these things. If it's a bad day, if it's chaotic, you pray a lot and when you wake up you hope the next day is better."

No broad brush on his symptoms

Zack has seen psychiatrist Dr. Robert Richards since elementary school.

Richards doesn't use a broad brush to describe Zack's symptoms, he says, because the disorders manifest themselves differently according to the individual, the responsiveness to treatment and the resources available. But Richards did classify Zack's problems as severe.

Still, the teen has a "high-level of sensitivity and intuitiveness," Richards said. His drawings could be a way for him to express his view that people should be treated with kindness.

"If you look at other aspects of personality growth and development, he has a strong capacity for empathy," says Richards.

Dr. Ken Duckworth, a psychiatrist and the medical director for the National Alliance on Mental Illness, says the two most important variables in treating mental disorders and illness are family support and the patient's willingness to accept help from loved ones.

Kim says Zack is family-oriented, always wanting to be near and spend time with his parents.

"I can't tell them how much I love them in words," says Zack.

Doug Hix, who has been married to Kim for 21 years, works for an engineering company. At times, his work puts him on the road for two or three weeks a month. When he is home, Doug says he makes spending time with his children a priority. He and Zack race mountain bikes, follow the Atlanta Braves and never miss a University of Georgia football game.

"When he's at a calm state, when he's the Zack that we know and love, he's a great kid," Doug Hix says. "If his med levels are where they need to be, he can focus. Interaction with faculty and student body, it's spot on. You'd never expect anything."

It's those other times -- when he can't remain calm -- that trouble his parents.

Zack's OCD can cause him to grasp onto single thoughts. He'll want to do things perfectly and not being able to can sometimes propel him into a rage that can last for hours, his mother says. The episodes have occurred since Zack was a child.

Enter Good Boy Roy

Zack has drawn pictures since he was old enough to hold a pen. He has always gravitated toward cartoons, Japanimation characters and superheroes, his parents say. Drawing seems to provide Zack the context his compulsions won't allow, and his mother says he's always used artistic expression to apologize after acting out.

The characters are based on Zack and those close to him. Volleyball Girl was inspired by his younger sister, Kelsie, and Handsome Hen takes after the man who introduced Zack to "The Simpsons," his uncle Henry.

In 2009, Zack took a stack of Good Boy Roy drawings to his mother and asked what she thought. She liked them enough to have one printed on a red T-shirt, his favorite color.

Zack wore the shirt everywhere. Kim Hix had already considered making Good Boy Roy a business, but when she saw how proud the T-shirt made Zack, she wondered if it might be a way for Zack to support himself after high school if his mental health issues prove to be barriers to employment.

"I have always been a fixer," she said. "That has been my job since Zack was born, trying to get him help and get him the resources that can help him progress."

Since 2010, Zack's mother says he has made about $12,000 from merchandise and custom design sales, so the business is very much part-time. He has also illustrated a children's book, "A World Without Circles." The book's publisher has asked Zack to work on a children's book about bullying, something he experienced during middle school related to his Tourette's syndrome, his mother says.

Zack plans to graduate from high school in 2014 and hopes to continue spreading Good Boy Roy's message. He wants Roy, Zman and Rocker Rick to be known worldwide so they can inspire others with disabilities to find work.

Meanwhile, Kim Hix is learning how to juggle building a business with her own career and being a mother and wife. It's still very much a work in progress, but she hopes Good Boy Roy will reach other families dealing with mental health disorders and let them know they're not alone.

"Good Boy Roy, the business and brand, was launched to share with the world this story of hope, determination and overcoming challenges; [to] reach parents of children like Zack, to let them know they are not alone in their heartache and uncertainty; [to] let the kids know that anything is possible, and being different is OK."

This article is taken from CNN.com

Egyptian tourism in crisis as governments prepare to evacuate citizens

(CNN) -- Russia and France are preparing contingency plans to evacuate their citizens from Egypt, as violent clashes between the military government and Islamists in the country continue.

In the latest violence, suspected militants killed at least 25 Egyptian soldiers with rocket-propelled grenades in the Sinai Peninsula.

Russia's Federal Aviation Agency has ordered airlines to prepare plans to airlift Russian tourists from Egypt, the Moscow Times reported. Russia's largest airline, Aeroflot, said it was ready to begin evacuating passengers from the country as soon as it was instructed to do so.

Late last week France also announced that it had a plan to evacuate its citizens under review.

Travel advice hardens

Russia was among other governments that had already hardened their travel advice on Egypt following the killing last week of more than 500 people in Cairo and other cities in protests against the military overthrow of the government of Mohamed Morsi.

Having advised its citizens against traveling to Egypt, on Thursday Russia barred tour operators from selling vacations to the country.

Germany extended its advice against travel to the country to include the Red Sea beach resorts around Hurghada and Sharm El-Sheikh -- areas that have been largely immune from the unrest of recent months and that foreign governments have tended to advise were safe.

Last week the government of Hong Kong also raised its travel warning, to "black," advising against all travel.

On Wednesday night, following the day of violence in Egypt in which hundreds of people died as security forces cleared pro-Morsi sit-ins, vacationers in Hurghada had letters posted through their hotel bedroom doors telling them to stay within the hotel grounds and that all excursions had been canceled, the TravelMole website reported.

U.S. and British travel advisories on Egypt remain basically unchanged. The U.S. State Department continues to urge its citizens to leave Egypt, if they can. Any remaining in the country should monitor local media for updates on the unrest, it says.

The British Foreign and Commonwealth Office continues to advise against travel to Egypt, except the Red Sea resorts. The FCO has for some time advised against travel to the lawless Sinai Peninsula, where the recent grenade attack on Egyptian soldiers took place, except for the resort areas.

Tourists in Hurghada were advised this week to stay in their hotels.

Compensation

Government travel advisories are important not only for travelers' safety but because they affect what compensation they can claim.

Following the German government's announcement, the tour operator TUI Germany said it was cancelling all trips to Egypt until September 15 and that travelers already in its resorts could stay for the remainder of their holiday or leave early.

In Britain, a travel journalist specializing in the Middle East, Matthew Teller, told the Guardian: "What the FCO does or doesn't say rules the roost in terms of what tour operators can and can't offer clients."

Travelers were unlikely to be able to change their plans if they were booked to travel in an area, such as Sharm el-Sheikh and other Red Sea resorts, that the government deemed safe, he said.

Cancellations

Other large travel firms were altering or canceling their Egypt travel programs, in addition to TUI.

Thomas Cook said it had canceled all excursions from Red Sea resorts to Cairo, Luxor and sights including Moses Mountain and St Catherine's Monastery on the Sinai Peninsula.

Kuoni, the UK-based operator, has also canceled all Egyptian excursions for 30 days.

Tourism is vital to Egypt, employing around 10% of the workforce.

British Airways has changed its flight schedules to Cairo to avoid the dusk-to-dawn curfew the government has imposed as part of its state of emergency, although tour operators are still being allowed to operate overnight transfers to Sharm el-Sheikh.

"We are also offering customers the option of rebooking to a later date, or to another destination," a BA spokesman said.

Most tourists fly to the Red Sea resorts directly. Easyjet, which runs flights to Sharm el-Sheikh, said it was allowing some passengers with flights booked to Egypt within the next few days to change their destination.

The cruise operators MSC, Costa and Holland America Line have also reportedly canceled their Egypt-bound ships.

Tourism vital

The latest violence in months of unrest in Egypt can only do further damage to the country's vital tourism industry, which normally employs around 10% of the workforce and brought in $10 billion in 2012.

As chaos has increasingly gripped the country, beginning with anti-government protests in 2011 that led to the overthrow of the Hosni Mubarak regime, tourist numbers have fallen by almost one-third -- from 14 million in 2010 to 10.5 million last year.

In further news, the Egyptian ministry for antiquities has closed archaeological sites and museums across the country to protect them from looting, the Egyptian newspaper al Alhram reported.

This article is taken from CNN.com

Barack Obama did Hillary Clinton a huge favor

Editor's note: Julian Zelizer is a professor of history and public affairs at Princeton University. He is the author of "Jimmy Carter" and "Governing America."

(CNN) -- Hillary Clinton has started to re-enter the public spotlight, very possibly beginning a new stage of her career that may lead to the presidential election of 2016.

In recent appearances, Clinton seems energized and spirited. She has already begun to talk about issues like women's rights and voting rights, causes that have animated her for decades. Gone is the constrained demeanor that turned off many potential supporters in previous years. The real Hillary Clinton seems to be emerging.

Republicans are instantly attacking as might be expected. Former House speaker and presidential candidate Newt Gingrich, an arch nemesis of the Clintons in the 1990s, warned that she was promoting "left-wing ideas" that would lead to her defeat.

Julian Zelizer

Those kinds of attacks won't have the same weight as they did eight years ago. The former first lady, senator, and secretary of state is in excellent position to run the kind of campaign that is true to her history, in large part because of the impact that President Obama has had in the past six years.

Democrats are more confident about throwing their support behind a candidate who stands proudly for the key tenets of the liberal tradition: a belief that government can help solve social problems in the United States.

Unlike her husband, who felt in the early 1990s that he had to emphasize his centrist, new Democratic credentials, President Obama has opened the doors for a Democrat to build their campaigns on the tradition of the New Deal and Great Society, rather than running away from that legacy.

How did President Obama make this happen? Most important, the president has been far more assertive in his willingness to use the federal government to address big domestic challenges than many Democrats who preceded him. The Affordable Care Act put into place a large series of regulations aimed at providing better and more accessible care for a health care system whose costs had spun out of control.

Clinton project won't be a 'valentine'

Barro: Benghazi not a big deal for her

The Dodd-Frank Act provided a regulatory framework to prevent the kind of risky behavior that led to the 2008 financial crash, and the economic stimulus provided government money to help get the economy moving again.

Since his re-election in 2012, an important mark for Democrats that these kinds of policies don't result in inevitable defeat, Obama has also fought back against the austerity drives of the GOP, defending key government programs from the scalpel. After the Supreme Court weakened the Voting Rights Act, Obama vowed to protect the law and Attorney General Eric Holder announced that he would not allow states to violate rights. Though hesitant at first, President Obama has embraced the major social movement of our day—gay rights—taking a more progressive stand than any president before him.

In short, President Obama has broken an important barrier for Clinton, or any other Democrat, by allowing members of his party to be proud of their ideals and challenging the notion that the only way for their party to win is to agree with the right.

President Obama has also shifted the center of political debate by driving Republicans further to the right ever since the 2010 midterms. Tea party Republicans have placed immense pressure on the Republican leadership to take harder line stances on issues like the budget.

Republicans moved so far to the right they have made liberal Democrats seem much more moderate. Liberal Democrats, who back in the 1990s could still be attacked as "the far left" can appear more "reasonable" to the mainstream when compared with conservative Republicans. The tea party has also opened the door to Clinton, as Obama discovered with Mitt Romney in 2012, to build a campaign that argues the GOP is too extreme to govern.

In a very different way, President Obama has created a huge opportunity for Hillary Clinton because of his failures. Despite his accomplishments, he has failed to make progress on a number of important issues that Clinton can embrace as central to her platform, setting her up to be a leader who can complete and move beyond what President Obama has started.

The most important is the economic insecurity of the middle class. The sluggish economic recovery and historically high rates of inequality, which Obama himself laments but has not been able to reverse, give Clinton a potent theme to run on. Gingrich might call such rhetoric left wing, but for millions of Americans it will strike the exact right chord.

Clinton, who demonstrated her skill on the international stage, also has a chance to address some of the disappointments with President Obama's foreign policy.

Many Democrats are watching the events in Egypt, deeply concerned that the unraveling of democracy will undermine the kinds of promises that Obama made about liberal internationalism and the ability of diplomacy to solve global problems without resort to war. Many Democrats are also unhappy with the ongoing revelations about how Obama continued with President Bush's war on terror programs, making them even more robust with extensive NSA surveillance and drone attacks.

Unlike most of the Democrats who are considering entering into the campaign, Clinton now has an extensive record of experience on foreign policy that will bolster her credentials as she talks about what she would do to correct these problems. If she tackles these issues effectively, she could energize support from liberals in her party who previously dismissed her as the candidate of the status quo. Even if President Obama's approval ratings decline further, Clinton has an opportunity to win public support using the framework Obama put forward.

Hillary Clinton now has an excellent chance to put together the kind of presidential campaign that was elusive in 2008, one that could very well give the nation its first female president. In the coming months she will have to decide whether she wants to take this step or to instead focus on her work as a global leader outside government. But the opportunity for her is there and Obama, who once was engaged with her in some of the most bitter fights that Democrats have seen among their own in many years, has changed the terms of the debate in ways that will greatly benefit her.

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This article is taken from CNN.com