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Could the turmoil in Egypt affect the U.S. economy?

Rising oil prices have an effect on U.S. economic growth in two ways – direct and indirect. When gasoline prices jump, drivers feel a hit to the pocketbook every time they fill up, reducing the money available for other purchases. Additionally, products like cars and high-tech gadgets require large amounts of cheap energy to mine, transport and process the raw materials. Even small increases in oil prices have a multiplied effect on the cost of production, leading to either a higher price tag (depressing demand), or a lower profit margin (depressing stock prices and market growth).

The turmoil has already effected the US economy. Oil prices have been increasing in the past two weeks, and have topped $100. This will raise some prices and retard a portion of our economic growth. The ongoing uncertainty in Egypt has increased risk premiums on shipping insurance, and that drives up the cost of oil and gas imports as well as other cargo. And it’s not just Egypt in turmoil but much of the Middle East. A zone of instability that Washington thought was fairly stable has erupted — all near some of the world’s most important oil and gas reserves.

Secondly, unrest in Egypt has elevated anxiety about the continued operation of the Suez Canal and the Sumed Pipeline, which connect the Red Sea to the Mediterranean. The Suez Canal is a critical transit “choke point” between the Mediterranean and the Middle East and Asia for petroleum products and other types of cargo. Although there have not been indications that either of these choke points have been targeted, it remains a possibility.

Furthermore, whatever the outcome of Egypt protest, may effect relations between Egypt and US, which may in turn effect other things. At the moment, US has good relation with Egypt and can use it as a military base. The Obama administration needs to take steps to make sure they are on the good side of the new government, if a new one forms.

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Grim outlook for Democrats puts House up for grabs (AP)

AP – Their control of the House in peril, Democrats are scratching to survive in races all across the country. Disgruntled voters, a sluggish economy and vanishing enthusiasm for President Barack Obama have put 75 seats or more — the vast majority held by Democrats — at risk of changing hands.

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Obama assails GOP, promotes new jobs program (AP)

AP – A combative President Barack Obama rolled out a long-term jobs program Monday that would exceed $50 billion to rebuild roads, railways and runways, and coupled it with a blunt campaign-season assault on Republicans for causing Americans’ hard economic times.

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Obama getting fewer judges confirmed than Nixon (AP)

AP – A determined Republican stall campaign in the Senate has sidetracked so many of the men and women nominated by President Barack Obama for judgeships that he has put fewer people on the bench than any president since Richard Nixon at a similar point in his first term 40 years ago.

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Obama calling for more infrastructure spending (AP)

AP – President Barack Obama is asking Congress to approve at least $50 billion in long-term investments in the nation’s roads, railways and runways in a pre-election effort to show he’s trying to stimulate the sputtering economy.

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As election season heats up, Democrats battle grim prospects (Exclusive to Yahoo! News)

Exclusive to Yahoo! News – Just how bad could things get for the Democrats when voters head to the polls in November?

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McCain embraces the GOP’s right (Politico)

Politico – Joined by fellow senator Lindsey Graham, he dug in against the Obama administration.

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How Barack Obama became Mr. Unpopular (Time.com)

Time.com – Nine weeks before the midterm elections, Barack Obama finds himself on the wrong side of the polls. Where did all that adoration go — and is a Republican sweep next?

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Obama urges Israelis, Palestinians to seize moment (Reuters)

Reuters – Israeli and Palestinian leaders believe they can achieve a Middle East peace deal within a year, President Barack Obama said on Wednesday as he urged both sides to seize the moment.

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Expectations low for round of Mideast talks (AP)

AP – After months of shuttle diplomacy, the Obama administration is set to plunge into a new round of Mideast peacemaking, bringing Israeli and Palestinian leaders together for face-to-face talks for the first time in nearly two years.

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