Juneau, Aug 10 (AP/UNB) — Daniel Bowen came to Alaska in 2011, looking for adventure and opportunity. He and his wife eventually settled on the Kenai Peninsula south of Anchorage, a salmon fishing haven calling itself "Alaska's Playground."
But the Bowens, both teachers, recently returned to their native Michigan. After years of stress over delayed state budgets, their breaking point, he said, was Gov. Mike Dunleavy's proposed reductions to K-12 spending and health and social service programs.
"We started to realize that Alaska isn't turning out to be where we want to raise our kids," Daniel Bowen said, adding later: "As much as we loved Alaska, we can only take so much, we can only take so much uncertainty."
The state has been roiled by a budget dilemma linked to its uneasy reliance on oil, bringing a reckoning that has scrambled traditional political alliances. For decades, Alaska binged on infrastructure and community projects when oil prices were high and cut spending and closed facilities when they weren't. This time, prices haven't boomed and after years of drawing down savings and cutting expenses, state leaders face tough decisions.
The situation has politicians debating changes to the annual dividend paid to residents from Alaska's nest-egg oil-wealth fund. The checks, seen by many as an entitlement, once were considered almost untouchable. But the budget reality, and differences over taxes and spending, has politicians and residents choosing between the size of the prized checks and public services many expect.
The anxiety is tied to persistent low-to-middling North Slope oil prices. Prices topping $100 a barrel in 2014 went into a free-fall that worsened a budget deficit now in its eighth year. State revenue officials believe prices in the $60 a barrel range to be realistic long-term.
This year, an average of about 508,000 barrels of oil a day has coursed through the 800-mile (1,288-kilometer) trans-Alaska pipeline, according to the pipeline operator. On the pipeline's peak day in 1988, 20 years after oil was discovered at Prudhoe Bay, 2.1 million barrels flowed.
"Alaska needs to think about the new world we have today," said Cliff Groh, a longtime political observer, adding later: "The cavalry" of high prices and booming production "does not seem to be coming."
Oil has been the economic lifeblood of Alaska, whose population of about 735,000 is less than Seattle's. A 1969 oil and gas lease sale was a game-changer, said Eric Wohlforth, a state revenue commissioner in the early '70s and a former Alaska Permanent Fund Corp. board trustee.
"Suddenly we were a place that the bankers looked on with envy rather than just the poor supplicant," he said. The sale reaped $900 million that went toward infrastructure and other needs but was pretty well spent around the time the pipeline came online in 1977, he said.
In 1976, voters approved creating the Alaska Permanent Fund and dedicating a portion of mineral wealth to it. The fund, grown through investments, was valued as of June at $66 billion, with the earnings reserve portion valued at $18 billion.
The fund's principal is constitutionally protected but its earnings are spendable. Lawmakers had long limited use of earnings to such things as fortifying the fund and paying dividends based on an average of fund income over five years.
But last year, after going through billions of dollars in savings and at odds over taxes and further budget cuts, lawmakers began using earnings to help pay for government and sought to restrict what could be withdrawn for dividends and government.
Alaska has no state sales or personal income taxes.
Dunleavy, a Republican, says a longstanding dividend calculation that hasn't been followed for three years should be followed until it's changed. That would mean checks of about $3,000 this year. His support on the issue includes conservative Republicans and some Democrats, though other conservative Republicans and Democrats have resisted.
He has indicated willingness to discuss formula changes but insisted on a public vote. He said Alaskans didn't mind the size of their checks until politicians began tinkering. Checks in recent years ranged from $878 in 2012 to $2,072 in 2015, the year before they were capped.
The Legislature, with a bipartisan House majority and GOP-led Senate, wants Dunleavy to consider a roughly $1,600 check this year. Many lawmakers say the formula is unsustainable and have balked at violating the draw rate and setting a precedent of dipping deeper into the reserve.
Higher-than-expected draws could reduce what's available in earnings and at some point put pressure on the corporation to change its strategies to churn more money into the earnings reserve account, said Angela Rodell, the corporation's CEO.
Carl Davis, research director with the Washington, D.C.-based Institute on Taxation and Economic Policy, said cutting the dividend is regressive, hitting lower-income families particularly hard. He sees no conflict between paying a dividend and taxing residents.
While some Democrats want to debate oil taxes and whether companies are paying enough, Dunleavy has focused on cutting a budget he considers unsustainable.
There would not be an "honest discussion" about spending if tax bills also were being introduced, said Dunleavy's revenue commissioner, Bruce Tangeman.
Dunleavy vetoed more than $400 million, riling critics who say it's too much, too fast and prompting public outrage that is fueling a recall attempt. The Board of Regents, facing a potential 40% cut in state support for the university system, has taken initial steps toward consolidating its three accredited campuses into one.
Lawmakers, unable to reach the higher threshold required to override Dunleavy's vetoes, passed legislation seeking to reverse many of the cuts. Dunleavy has the option of cutting again.
Larry Persily, a former deputy revenue commissioner, said the choices are painful.
"These are a lot of different math problems made worse by the fact that we've lived two generations without taxes, two generations with free money and two generations of candidates who won if they could wrap themselves in the biggest dividend flag. As I've told some groups the last couple weeks, 'Guys, we did this to ourselves,'" he said.
Washington, Aug 10 (AP/UNB) — The International Monetary Fund sees little evidence that China's central bank has deliberately reduced the value of the nation's currency — a position at odds with the Trump administration's decision this week to accuse Beijing of manipulating the yuan.
The IMF said Friday in its yearly review of China's economy that the yuan has been "broadly stable" against other currencies, suggesting there's been little intervention by the People's Bank of China. A weaker yuan would give Chinese exporters a competitive price advantage over foreign rivals.
The Treasury Department on Monday named China a currency manipulator for the first time since 1994. The move, reversing its decision in May to keep China off the blacklist, came after Beijing's central bank let the yuan drop to its lowest point in 11 years.
"Clearly, they are manipulating their currency," White House trade adviser Peter Navarro told CNBC Friday.
China's central bank sets the exchange rate each morning and allows the yuan to fluctuate by 2% against the dollar during the day. The central bank can buy or sell currency — or order commercial banks to do so — to keep the yuan's price from swinging too widely.
In letting the yuan slide, the central bank was responding to economic reality. China's economy is slowing — partly because President Donald Trump has slapped tariffs on $250 billion worth of Chinese imports — and market pressures are pulling the currency down.
The world's two largest economies are locked in a tariff war over U.S. allegations that China is stealing trade secrets and forcing foreign companies to hand over sensitive technology. Twelve rounds of talks have failed to end the impasse, and a Chinese delegation is expected in Washington next month to continue the negotiations.
But Trump rattled financial markets Friday by saying it would be "fine" with him if talks got called off. The Dow Jones Industrial Average fell 90.75, or 0.3%, to 26,287.44, and the Nasdaq dropped 80.02, or 1%, to 7,959.14.
New York, Aug 10 (AP/UNB) — Stocks stumbled Friday as worries flared yet again that President Donald Trump's trade war with China may be worsening. It was a fitting end to a wild week where markets zoomed down, up and down again as investors recalibrated by the minute how much the tensions will hurt the global economy.
The S&P 500 dropped as much as 1.3% Friday after Trump said that it would be "fine" if a meeting on trade with China next month doesn't happen, before nearly eliminating the loss. It dropped again in the final minutes of trading and ended the day at 2,918.65, down 19.44 points, or 0.7%.
The Dow Jones Industrial Average fell 90.75, or 0.3%, to 26,287.44, and the Nasdaq lost 80.02, or 1%, to 7,959.14.
To anyone not paying attention, the numbers could paint the last week as a ho-hum one for markets: The S&P 500 was down just 0.5%. But that stretch included the worst plunge of the year for the S&P 500, as well as its best day in months.
Through the week, investors' mood pinballed from fear that China was raising the stakes in the trade war by weakening its currency to relief that the yuan's drop wasn't more sharp and back to concern that the U.S. and China may not even meet next month to talk about their problems. All of that was follow-up to Trump's threat last week to impose more tariffs on Chinese goods.
Underscoring the uncertainty, investors said they had no good explanations for some of the sharp swings that stocks had over the last week. While nowhere near as bad as it got during the Great Recession, investors' fear about the uncertain path forward for corporate profits and the global economy sent gold prices jumping and bond yields tumbling.
"We don't really see an end to the uncertainty any time soon," said Sameer Samana, senior global market strategist at Wells Fargo Investment Institute. Beyond the U.S.-China trade war, he also pointed to the upcoming U.S. elections, the pending British exit from the European Union and a completely separate trade war between South Korea and Japan, among other things.
"Unfortunately, it's tough to tell whether we're at peak uncertainty, but the level of uncertainty is high. What's remarkable is how close the markets still are to their all-time highs despite all the uncertainty."
The S&P 500 is only 2.1% below its record, which was set at the end of July. It's also up 9% since Trump said in March 2018 that "trade wars are good, and easy to win."
The economy is still growing, and the unemployment rate remains near its lowest level in half a century. The fear is that all the uncertainty that has caused stock prices to swing sharply could also make businesses and shoppers more cautious. If they pull back on their spending, it could lead to weaker profits for companies, which could cause businesses to cut back on hiring, which could do real damage to the economy.
Such fear has been most pronounced in the bond market, where yields have tumbled as investors scrambled for protection. When bond prices rise, their yields fall, and the yield on the 10-year Treasury sat at 1.73% Friday, down from 1.85% a week ago. It rose from 1.71% late Thursday and had been below 1.60% in the middle of the week.
"The bond market has been pricing that in way earlier and to a much greater degree than the stock market has," Tom Martin, senior portfolio manager with Globalt Investments, said of the trade-war threat.
Other areas of the world are facing even weaker economic growth, and the British government reported that its economy shrank in the second quarter for the first time since 2012.
The FTSE 100 in London slipped 0.4%, while Germany's DAX lost 1.3% and the CAC 40 in France dropped 1.1%. In Asia, the Hang Seng in Hong Kong fell 0.7%, Japan's Nikkei 225 rose 0.4% and South Korea's Kospi gained 0.4%.
In the commodities markets, benchmark U.S. crude jumped $1.96 to settle at $54.50 a barrel. It had dropped as low as $50.52 earlier in the week amid worries that a weaker global economy would dent demand for energy. Brent crude, the international standard, rose $1.15 to $58.53 per barrel.
Gold edged down by $1.10 to $1,496.60 per ounce. It was a relatively quiet day following a roaring week, where gold hit its highest price in more than six years as investors scrambled for safety.
Silver was unchanged at $16.90 per ounce, and copper fell 2 cents to $2.58 per pound. Wholesale gasoline rose 2 cents to $1.67 per gallon. Heating oil climbed 3 cents to $1.81 per gallon. Natural gas fell 1 cent to $2.12 per 1,000 cubic feet.
The dollar slipped to 105.57 Japanese yen from 105.95 yen late Thursday. The euro strengthened to $1.1207 from $1.1185, and the British pound fell to $1.2056 from $1.2133.
Paris, Aug 9 (AP/UNB) — The trade war between the United States and China and a broader decline in world economic growth are weakening the demand for oil and pushing prices down, the International Energy Agency said Friday.
The Paris-based agency, which advises many developed countries on energy policies, cut its forecast for oil demand growth this year and next as trade tensions weigh on activity in the energy-hungry manufacturing sectors around the world.
The U.S. has put a series of tariffs on Chinese trade goods and China has responded by letting its currency drop, increasing uncertainty for businesses and exporters around the world.
"The prospects for a political agreement between China and the United States on trade have worsened. This could lead to reduced trade activity and less oil demand growth," the agency said in a monthly report on the energy market.
The trade dispute is worsening a downturn in global growth and dragging down demand for energy. The price of crude has fallen, with the international benchmark hitting its lowest since January, below $57 a barrel.
The IEA cut its forecast for oil demand growth by 0.1 million barrels a day, to 1.1 million barrels this year and to 1.3 million barrels a day in 2020.
It said that tensions in the Persian Gulf, where some oil tankers have been attacked amid a diplomatic standoff between the U.S. and Iran in particular, have heightened concerns. But the biggest impact on demand comes from trade disputes and lower growth.
"The outlook is fragile with a greater likelihood of a downward revision (to demand) than an upward one," the IEA said.
Supply, meanwhile, remains ample despite efforts by some countries, like Saudi Arabia to produce less to support the price of oil.
Phnom Penh, Aug 9 (Xinhua/UNB) -- Cambodia and Sri Lanka signed two memorandums of understanding (MoUs) on Thursday to boost bilateral relations in politics, trade and investment, a Cambodian senior official said.
Cambodian Prime Minister Samdech Techo Hun Sen and visiting Sri Lankan President Maithripala Sirisena presided over the signing ceremony of the MoUs after their meeting at the Peace Palace, said Eang Sophalleth, a personal assistant to Hun Sen.
The deals are the MoU on political consultations between the two foreign ministries and the MoU on bilateral cooperation between the chambers of commerce of the two countries.
"During the meeting, the two leaders also agreed to work together to promote bilateral cooperation in education, culture, tourism, trade, and civil aviation," Sophalleth told reporters after the meeting.
Trade volume between Cambodia and Sri Lanka is relatively low. According to a Cambodian Ministry of Commerce report, the two-way trade volume was valued at 3.9 million US dollars last year.
On the tourism side, some 2,079 Sri Lankans visited Cambodia in the first half of 2019, up 21 percent over the same period last year, said a Cambodian Ministry of Tourism data.
Sirisena arrived in Phnom Penh on Wednesday for a four-day state visit at the invitation of Cambodian King Norodom Sihamoni.