U.S. Investigates BP for Market Manipulation

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1. U.S. to China: No Economic Nationalism
2. U.S. Investigates BP for Market Manipulation
3. Consumer Confidence Plunges in August
4. Employers to Boost Pay by 3.7% in 2007

1. U.S. to China: No Economic Nationalism

A U.S. trade representative said Tuesday that China could seriously injure its economy and policy if it follows a path of economic nationalism.

American official Susan Schwab said in a news briefing that the Asian nation's progress could be set back by its unwillingness to both fully embrace global trade liberalization and quickly implement commitments made at the 2001 World Trade Organization meeting.

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Ms. Schwab implored Chinese leaders to take more initiative in trade talks, expressing "surprise that China was willing to allow other developing countries to represent its interest in the Doha talks through the ‘G6' negotiating group, which includes the European Union, the U.S., India, Brazil, Japan and Australia," according to the Financial Times.

"If you were China, with arguably the greatest stake in the world trading system than anyone else, would you want India and Brazil to be articulating your position in this small [group]?" Schwab said, according to the paper.

Schwab also focused on the need for China to follow through on WTO commitments to open up its financial sector to the rest of the world. While she acknowledged that the country has made huge strides in fighting piracy of movies, software and various patented and copyrighted merchandise, the feeling is that there is much more to be done.

"We do not enjoy bringing WTO cases," Schwab said, according to a Reuters report. "What we want is to resolve these issues before they require litigation. But when good-faith dialogue does not yield positive results, we cannot stand by and allow commitments to go unrequited."

The deadline for China to fully implement all its 2001 WTO commitments - which included promises to open up banking and insurance to foreign companies - is Dec. 11.

Of course, China has benefited hugely from membership in the WTO. But, Schwab said, China has repeatedly delayed approval for foreign firms looking to expand their businesses in its financial services sector - and that could hinder China's ultimate goal of bolstering domestic demand over exports.

As an example, for some time American investment groups such as Citibank have been negotiating for a controlling stake in China's Guangdong Development Bank - and they have been patiently "awaiting improvements that haven't necessarily been forthcoming," said Schwab.

According to the Times, Schwab said: "If there was one sector where you would be cutting off your nose to spite your face, this would be it. If your aim is to promote domestic demand and support local entrepreneurs, then you need a financial system that works."

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2. U.S. Investigates BP for Market Manipulation

The bad times keep getting worse for British oil and gas company BP LLC. After a Texas refinery explosion in 2005 and Alaska pipeline problems throughout this year, the company now faces a federal investigation that it allegedly manipulated crude oil and gasoline markets.

The Wall Street Journal broke the story, citing lawyers and traders close to the case. According to the Journal, the company is being probed for two separate incidents.

First, the Commodity Futures Trading Commission (CFTC) sent BP subpoenas related to the manipulation of the global over-the-counter crude-oil market over the course of 2003 and 2004.

The other probe, led by the Justice Department, is looking into the manipulation of gasoline markets trading on the New York Mercantile Exchange on a single day in 2002, says the Journal.

BP, the world's second-largest oil company, already faces charges for manipulation of the propane market as well, including one civil case and a criminal charge against a BP trader, says Marketwatch.

The Journal notes that BP has already had a run-in with the New York Mercantile Exchange, settling charges of improper crude oil trading for $2.5 million. The company also faced an inquiry by the CFTC, but it was closed without charges.

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3. Consumer Confidence Plunges in August

Worries about the job market caused consumers' confidence in the U.S. economy to tumble more than expected in August to its lowest level in nine months.

The Conference Board, a New York-based research group, said Tuesday its confidence index fell to a reading of 99.6, down from 107.0 in July. The index was lower than analysts' expectation of 102.5.

The last time the index fell below 100 was in November, which saw a reading of 98.3.

Americans' sentiment about the labor market worsened in August, with consumers saying jobs are "plentiful" decreasing to 24.4 percent in August from 28.6 percent in July, and those saying jobs are "hard to get" increasing to 21.1 percent from 19.6 percent.

The Conference Board's present situation index, which measures how respondents feel about current economic conditions, plummeted to 123.4 in August from 134.2 in July.

The expectations index, which gauges consumers' outlook over the next six months, dropped to 83.8 in August from 88.9 a month earlier.

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4. Employers to Boost Pay by 3.7% in 2007

Base pay for salaried workers is expected to rise 3.7 percent in 2007, according to a survey of employers by Hewitt Associates. The 3.7 percent increase is about the same increase as workers received this year.

The survey of 1,028 large companies also said that executive pay should increase 3.8 percent next year. Salaried workers who receive overtime pay should see their paycheck rise by 3.6 percent. Union employees will see the lowest pay increase next year, as employers predict a 3.3 percent increase, says CNN Money.

The best industries for salary increases include energy (4.5 percent), construction/engineering (4.1 percent), and aerospace (4.0 percent), says CNN Money.

In a separate study by the Labor Department, the New York Times reports that wage gains aren't keeping pace with inflation despite the current economic expansion. That's the first time this has happened since World War II, says the Times.

The Labor Department says inflation has outpaced pay over the past three years for nine out of 10 workers, including those earning up to $80,000 a year. The median hourly wage for American workers is down 2 percent since 2003 when adjusted for inflation.

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