It took months of discussion, but the Fed announced Wednesday that it will pare back its monthly bond-buying program by $10 billion. This “modest” reduction in Treasury bond and mortgage-backed securities acknowledges “cumulative progress toward maximum employment” and a rosier outlook for labor market conditions. It’s a major turning point in what has been the largest monetary policy experiment ever – and may just come as a surprise to investors who were banking on the status quo.
The Presidential Daily Brief
India-U.S. relations have soured since India’s deputy consul general was arrested in New York last week. Devyani Khobragade, who faces charges related to visa fraud and underpaying her maid, was allegedly strip-searched, DNA-swabbed and cavity-searched by American police. India claims that diplomats of her rank have legal immunity from such treatment, but the U.S. State Department disagrees. Meanwhile, India has removed security barriers from the U.S. embassy there, and several top Indian government officials have canceled meetings with American counterparts to protest what Foreign Minister Shankar Menon called Khobragade’s “despicable and barbaric” treatment.
Amid violent protests in Kiev about Ukraine’s increasingly friendly relationship with its eastern neighbor, Russia has offered to cut Ukraine a massive financial and political break. Russia plans to buy $15 billion of Ukrainian bonds, and cut exported gas prices by almost a third. Vladimir Putin said the move comes with no strings, but many interpret it as further incentive for Ukraine not to join the EU. As former CIA Director John McLaughlin tells OZY, Ukraine’s closer embrace of Europe could prove to be the death knell for Russia’s hopes to maintain a sphere of influence over former Soviet states.
After several months of political asylum in Russia, the famous whistleblower Edward Snowden has offered to help Brazil in its investigation of the NSA in exchange for permanent political asylum there. Brazil is one of the leading international critics of the NSA: President Dilma Rousseff called off a recent state visit to the U.S. in protest of the surveillance of top Brazilian officials. In an open letter to Brazil, Snowden praised the government’s efforts to investigate the NSA and offered his services — but only if Brazil defies the U.S. and lets him in.
Pope Francis has removed American Cardinal Raymond Burke from the powerful Congregation of Bishops and replaced him with the moderate Cardinal Donald Wuerl. Burke, an outspoken opponent of abortion and same-sex marriage, had clashed with Francis in message and style: the cardinal’s ornate and showy robes contrast with a pontiff who yesterday invited four homeless men to have breakfast with him on his 77th birthday. The Congregation of Bishops is perhaps the most important Vatican congregation, as it selects other bishops. Burke’s ousting, as OZY reports, may be just the start of the Pope’s plan to transform the Church.
At least two winners so far in the Mega Millions $636 billion jackpot. (USA Today).
U.S. Senate expected to pass two-year budget deal. (Politico).
Federal Reserve to announce whether it will scale back bond-buying at final 2013 meeting. (Reuters).
Up to 500 dead in clashes between warring factions in South Sudan. (BBC).
Dennis Rodman to return to North Korea tomorrow amid political turmoil. (NYT).
As a heartwarming gesture of Christmas cheer, Finnish bus company Matkahuolto made passengers a tasty offer: bring a gingerbread cookie with a destination written on it in icing, and get a free one-way ticket, on Tuesday. But after more than 1,000 creative Fins took advantage, the bus company ran out of cookie promo seats. In the end, most riders hoping to cook their way home for the holidays were disappointed. The silver lining: the rejected ticket holders have a tasty snack while they await their alternative transport.
Evolutionary biologists since Darwin have struggled to explain the competitive advantage zebras gain with stripes. Australian scientists may have cracked the code. Computer models seem to confirm that stripes function as an optical illusion by sending misleading visual signals to predators when the zebras move. When big cats or even tiny insects target a zebra harem, the stripes confuse them, causing them to misjudge pounces or landings. The findings may help researchers create “dazzling” effects for man-made structures such as battleships.
What do you do if you’re tired of your 10 million citizens littering, jaywalking, driving without a license and generally contributing to public disorder? If you’re Jakarta, you create a particularly torturous punishment: scrubbing public toilets. The Indonesian city’s deputy governor says the new sanctions” are part of an “education program” designed to “get people to live in order.” No word yet on whether the government intends to roll up its own sleeves to help clean up the city’s congestion through a long-awaited monorail and other public transit projects.
George Zimmerman, the Florida man who divided a nation during his trial for the shooting of teenager Trayvon Martin, appears to have found a way to cover his legal fees. Bids for Zimmerman’s own paintings have reached almost $100,000 on eBay. The work features a waving American flag in shades of blue inscribed with the words “God,” “One Nation,” and “With Justice and Liberty for All.” Zimmerman says painting has given him a therapeutic outlet and a way to express his emotions. Others are just glad that he’s found something to keep him off the streets.
Mashiro Tanaka, a rising Japanese baseball star, wants to play in the U.S., but the Rakuten Eagles won’t let him go. The Japanese league and MLB recently signed an agreement creating an annual trade window and capping the fee for Japanese players at $20 million, far less than the $51.7 million the Rangers paid for star pitcher Yu Darvish in 2012. The new agreement should make players like Tanaka, who went 24-0 with a 1.27 ERA last season, even more attractive to MLB clubs. But the lower transaction fee also decreases the chances that Rakuten and other Japanese teams will allow their most talented players to cross the Pacific.