The Republicans in the Senate killed the Buffett Rule, which is meant to tax Americans who earn more than $1 million, or some other large amount, depending on the version of the legislation. Critics claim the tax will raise only $5 billion a year. That would make very little difference to the size of the deficit. The rule remains a powerful political tool for those politicians who claim the rich are too rich and that American wealth should be redistributed. But many of the rich create jobs, so there remains a case that the tax would be regressive.

Trouble for Spain

Despite brisk demand, the cost for Spain to raise money continued at levels the government cannot pay if it want to cut deficits. According to CNBC, “The yield on the 12-month bill was 2.623 percent, compared with 1.418 percent at the last sale on March 20.” Global capital markets investors must believe that Spain’s current trouble will trigger a near default this year. A rescue could mean a renegotiation of bond values, as happened in the last Greek bailout. There remains a struggle over the possible rescue of Greece. The International Monetary Fund will try to raise $400 billion, much of which will be set aside to provide for the disintegration of Europe’s finances. On the other hand, Angela Merkel, who holds the purse strings of the region, still rejects anything other than austerity as a means to solve the problems of Spain and Italy.

Argentina and YPF

Argentina’s government says it will nationalize YPF, the nation’s biggest oil company. This will push out Spain’s Repsol, the majority shareholder. What is left now is to see if Repsol will have any recourse, or what it may get for its ownership portion. The act looks like the moves by Venezuela several years ago to seize the holdings of several multinational oil firms. Cristina Fernández, Argentina’s president, said the move was necessary because Repsol refused to let YPF invest in aggressive exploration and production. That caused the South American nation to import $9 billion in energy last year. The reason may not matter. Large oil companies have received a warning that Argentina is not a safe partner, which in turn will isolate the energy activity of the country even further.

Yahoo! Q1 Earnings

Yahoo! (NASDAQ: YHOO) will release first-quarter earnings today. They are expected to be dismal. The firm’s important display ad revenue probably will contract — again. Yahoo! once dominated inventory in this sector. Its piece has been dwarfed by Facebook’s. New CEO Scott Thompson has said little about what his plans are for the portal company’s future. Like CEOs before him, he has cut jobs — in the most recent case 2,000 of them. That will increase margins, at least temporarily. But most investors still believe that the key to Yahoo!’s value is its holding in China e-commerce company Alibaba and its stake in Yahoo! Japan. Thompson has said nothing about what he plans to do with these. The media have followed his plans recently, and the foreign properties do not appear to be near-term concerns.

Douglas A. McIntyre

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