Category : Credit Markets

Pressure Builds on Italy and Spain Over Finances

Investors continued to flee Italian and Spanish bonds Tuesday amid renewed concerns about the ability of Rome and Madrid to regain control of their finances in the face of sluggish growth and weakened administrations.

The Italian economy minister, Giulio Tremonti, called a meeting of the country’s financial authorities Tuesday to discuss the recent market turmoil, Reuters reported, citing an unidentified official. The Italian Treasury did not respond to calls seeking comment.

In Madrid, meanwhile, Prime Minister José Luis Rodríguez Zapatero delayed the start of a planned vacation to the southern region of Andalucia. Reuters quoted the secretary of state for communications as saying the prime minister wanted to “more closely monitor the evolution of the economic indicators.”

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Foreign Relations, Italy, Politics in General, Spain, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

(Der Spiegel) Europe on the Verge of Becoming a Transfer Union

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Globalization, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Washington Post–White House, congressional leaders reach debt-limit deal

President Obama and congressional leaders Sunday night sealed a deal to raise the federal debt limit that includes sharp spending cuts but no new taxes, breaking a partisan impasse that has driven the nation to the brink of a government default.

The agreement brings to an end a self-created crisis that has consumed Washington, rattled Wall Street, and shaken confidence in the American political system at home and abroad. The deal could clear Congress as soon as Monday night ”” barely 24 hours before Treasury officials have said they could begin running short of cash to pay the nation’s bills.

Passage of the agreement, however, remained far from certain in the House, where skeptical Republicans were just beginning to digest the details….

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Posted in * Culture-Watch, * Economics, Politics, Budget, Credit Markets, Economy, Globalization, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

Economist Leader: Debt and politics in America and Europe–Turning Japanese

America’s debt debate seems still more kabuki-like. Its fiscal problem is not now””it should be spending to boost recovery””but in the medium term. Its absurdly complicated tax system raises very little, and the ageing of its baby-boomers will push its vast entitlement programmes towards bankruptcy. Mr Obama set up a commission to examine this issue and until recently completely ignored its sensible conclusions. The president also stuck too long to the fiction that the deficit can be plugged by taxing the rich more: he even wasted part of a national broadcast this week bashing the wealthy, though the Democrats had already withdrawn proposals for such rises….

In both Europe and America electorates seem to be turning inward. There is the same division between “ins” and “outs” that has plagued Japan. In Europe one set of middle-class workers is desperate to hang on to protections and privileges: millions of others are stuck in unprotected temporary jobs or are unemployed. In both Europe and America well-connected public-sector unions obstruct progress. And then there is the greatest (and also the least sustainable) division of all: between the old, clinging tightly to entitlements they claim to have earned, and the young who will somehow have to pay for all this.

Sometimes crises beget bold leadership. Not, unfortunately, now….

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Globalization, House of Representatives, Office of the President, Politics in General, President Barack Obama, Senate, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

(SMH) Prayers unanswered as Sydney Anglicans brace for more cuts

The Anglican Church’s Sydney diocese faces another year of belt tightening and cuts to community services after its investment arm warned of a ”substantial reduction” in its annual payout.

Two years after it lost $160 million because of a high-risk gearing strategy, the investment arm of the country’s largest Anglican diocese has blamed a 71 per cent fall in earnings – to $3.2 million for the year to December – on a ”subdued performance” by the Australian sharemarket. The result would have been worse if not for a $4.5 million rise in the value of its investment in St Andrew’s House.

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Posted in * Anglican - Episcopal, * Christian Life / Church Life, * Economics, Politics, Anglican Church of Australia, Anglican Provinces, Credit Markets, Economy, Parish Ministry, Stewardship, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Local newspaper Editorial–Hope amid a debt debacle

Tea Party activists in and out of office, including 1st District Rep. Tim Scott, have been demanding more spending-cut assurances than House Speaker John Boehner can deliver on the debt accord. They should realize that with Democrats still controlling both the Senate and White House, they can’t get everything they want this time around.

Tea Party folks also should realize that unless the debt ceiling is raised in time, the immediate bottom-line consequences could include a federal default and U.S. credit-rating downgrade.

Of course, even with a debt deal, the nation still faces serious financial risks — including a credit-rating demotion. Fortunately, next year’s presidential and congressional elections will give voters another chance to send the message that Washington can’t keep spending so far beyond our means.

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Posted in * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Medicare, Social Security, Stock Market, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

Peter Coy–Why the debt crisis is worse than you think

That’s why the posturing about whether and how Congress should increase the debt ceiling by Aug. 2 has been a hollow exercise. Failure to increase the borrowing limit would harm American prestige and the global financial system. But that’s nothing compared with the real threats to the U.S.’s long-term economic health, which will begin to strike with full force toward the end of this decade: Sharply rising per-capita health-care spending, coupled with the graying of the populace; a generation of workers turning into an outsize generation of beneficiaries. Hoover Institution Senior Fellow Michael J. Boskin, who was President George H.W. Bush’s chief economic adviser, says: “The word ”˜unsustainable’ doesn’t convey the problem enough, in my opinion.”

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Posted in * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, House of Representatives, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

Ambrose Evans-Pritchard–Flee to Mars if America commits worst error since 1931

Should America embark on such fiscal contraction at a time when economic growth has already slipped to stall speed, and debt deleveraging continues with a vengeance, I would like to flee to Mars for safety.

Yes, there is such a concept as an “expansionary fiscal contraction”, as in Ireland (1980s), Denmark (1990s), arguably Canada (1990s), and the UK after both 1932 and 1993, but in every successful case this was accompanied by monetary loosening. That card has already been played this time.

Should America instead opt to evade these fiscal cuts by actually defaulting on debts accumulated by self-indulgent baby boomers, I would also like to flee Mars because such an outcome might be even worse.

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Posted in * Economics, Politics, * International News & Commentary, America/U.S.A., Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Federal Reserve, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc), Treasury Secretary Timothy Geithner

Tariq Ramadan–Whither Europe?

No European country can succeed on its own – but the political determination to deal with the populations’ fears and concerns is still lacking. Europe needs radical internal reform led by committed and courageous political leaders. Such leaders must begin by declaring, repeating and teaching that Europe has changed, that it has a new face. New priorities, even though unpopular on the short run, must be established in order to hope for success in the long term.

Europe needs time, but our politicians are caught on the horns of a dilemma. While they need to think beyond the next generation, they are obsessed with winning the next election. Trapped between short-term imperatives and long-term necessity, it might well be that they cannot find a solution.

Citizens and civil society as a whole have no choice but to break the vicious circle – they cannot allow their future be destroyed by a lack of collective confidence and by narrow individual political ambition. It is time to be vocal and constructively critical.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Politics in General, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Deadline Passes as Debt Ceiling Talks Languish

House Speaker John A. Boehner and the Senate majority leader, Harry Reid, were preparing separate backup plans to raise the nation’s debt ceiling on Sunday, after the leaders were unable to end an increasingly grim standoff over the federal budget.

The dueling plans emerged as lawmakers appeared to miss a self-imposed deadline of 4 p.m. Eastern time to cut a deal before markets open in Asia. And at about 6 p.m., President Obama began meeting with Mr. Reid and the House Democratic leader, Nancy Pelosi, in the Oval Office to discuss the Reid proposal.

Mr. Reid, the Senate’s top Democrat, was trying Sunday to cobble together a plan to raise the government’s debt limit by $2.4 trillion through the 2012 election, with spending cuts of about $2.5 trillion. He would seek to avoid cuts to entitlement programs, but it was unclear how those savings would be achieved.

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Posted in * Economics, Politics, Budget, Credit Markets, Currency Markets, Economy, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

(Politico) No debt deal hours before markets open

House and Senate negotiators have not reached a deal that would lift the nation’s debt ceiling just hours before markets in Asia are set to open ”” a test of whether Washington political dysfunction is beginning to shake the global economy.

House Republicans are not able to reach a deal with Senate Democrats, said congressional sources, though staff-level negotiations are continuing.

And in a sign that talks with Republicans appear to be going sour, Senate Majority Leader Harry Reid (D-Nev.) began to draft his own legislation Sunday that would slash at least $2.5 trillion to match an extension of the nation’s borrowing limit through the 2012 election, leadership aides said.

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Posted in * Culture-Watch, * Economics, Politics, Budget, Credit Markets, Currency Markets, Economy, Globalization, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Stock Market, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

(FT) Philip Stephens–Spasm or spiral? The West’s choice

Behind the paralysis in Washington and prevarication in Berlin lies a troubling thought. Political systems in thrall to 24-hour rolling news have lost the capacity to make difficult choices. Globalisation imposes wrenching change and simultaneously saps the ability of governments to adapt. Politicians find it easier to argue about taxing the rich or cutting Medicare and about central bank bond purchases versus default than to confront the consequences for western societies of the profound upheaval in the global economy.

So it is tempting to say all is lost ”“ that a political and economic model built on western primacy is cracking under the strain of the shifting balance of international advantage. The American dream and European welfare state are bending to the competitive winds of globalisation.

Tempting but premature. It is too early to despair. What makes the crises in Washington and Europe so infuriating is the fact that, for all they demand hard decisions, they are susceptible to political solution. The missing ingredient is leadership.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Budget, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, Euro, Europe, European Central Bank, France, Germany, Greece, History, House of Representatives, Italy, Office of the President, Politics in General, Portugal, President Barack Obama, Senate, Spain, The National Deficit, The U.S. Government, Theology

([London] Times) Camilla Cavendish–Tomorrow looks like Black Friday for Europe

Three years ago, the collapse of Lehman Brothers, the US investment bank, triggered a domino effect that had calamitous consequences for the world. No one knew how many institutions had lent money to Lehman, or how many might be pulled down with the bank. Fear spiralled through the financial markets and central banks worked overtime to prop dominoes up. The result was a painful recession.

This time, some of the dominoes are nations. Greek debt is about three times the size of that of Lehman Brothers. Around half of it is held by foreign investors, who will be hit if Greece defaults. Add in Spain and Italy, which represent about 28 per cent of eurozone GDP, and the numbers get scary. Add in a leadership vacuum, and investors start asking why they should keep lending to countries such as Italy that are troubled but still solvent…

That Europe has reached its Lehman moment is substantially the fault of its myopic and reckless power elite.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, France, Germany, Globalization, Greece, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Thomas Friedman on the European Financial Crisis–Can Greeks Become Germans?

Katerina Sokou, 37, a Greek financial journalist at Kathimerini, a daily newspaper, told me this story: A group of German members of the Bavarian Parliament came to Athens shortly after the economic crisis erupted here and met with some Greek politicians, academics, journalists and lawyers at a taverna to evaluate the Greek economy. Sokou said her impression was that the Germans were trying to figure out whether they should be lending money to Greece for a bailout. It was like one nation interviewing another for a loan. “They were not here as tourists; we were giving data on how many hours we work,” recalled Sokou. “It really felt like we had to persuade them about our values.”

Sokou’s observation reminded me of a point made to me by Dov Seidman, the author of the book “How” and the C.E.O. of LRN, which helps companies build ethical business cultures. The globalization of markets and people has intensified to a new degree in the last five years, with the emergence of social networking, Skype, derivatives, fast wireless connectivity, cheap smartphones and cloud computing. “When the world is bound together this tightly,” argued Seidman, “everyone’s values and behavior matter more than ever, because they impact so many more people than ever. …We’ve gone from connected to interconnected to ethically interdependent.”

As it becomes harder to shield yourself from the other guy’s irresponsible behavior, added Seidman, both he and you had better behave more responsibly ”” or you both will suffer the consequences, whether you did anything wrong or not. This is doubly true when two different countries share the same currency but not the same government….

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Globalization, Greece, History, Politics in General, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

New Senate “Gang of Six” Debt Plan Emerges

According to a copy of the plan, obtained by POLITICO, the group would impose a two-step legislative process that would make $500 billion worth of cuts immediately followed by a second bill to create a “fast-track process” that would propose a comprehensive bill aimed at dramatically restructuring tax and spending programs. The plan calls for changes to Social Security to move on a separate track, and establishes an elaborate procedure for considering the measures on the floor.

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Posted in * Economics, Politics, Budget, Credit Markets, Economy, Medicare, Politics in General, Senate, Social Security, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

(FT) Wolfgang Münchau–Plan D stands for default and death of euro

Five years ago, I was among those who argued that the probability of a collapse of the eurozone was close to zero. Last year, I wrote it was no longer trivial, but small. The odds have risen steadily since, not because of the crisis itself, but the political response. I now would put the odds of a break-up of the eurozone at 50:50. This is not because I doubt the pledge by the European Council to do whatever it takes to save the euro but because I fear it has left things too late. The council may be willing but it will not be able to deliver. As I argued last week, a eurozone bond is the only solution to the crisis. But this gets progressively more expensive, and politically less realistic, once bond spreads of large countries widen.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, England / UK, Euro, Europe, European Central Bank, France, Germany, Greece, Ireland, Italy, Politics in General, Portugal, Spain, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Religion and Ethics Newsweekly–Religious Leaders and the Budget Debate

[BOB] ABERNETHY: But the common good. This idea of the common good, very important in religious and ethics. How do you define it? And who says what the common good is?

[JIM] WALLIS: Well, this week we’ve organized 5,000 pastors to say let’s look at the real people in our congregations and our communities, what’s going to happen to them as opposed to the Washington, D.C. question, who’s up who’s down, who’s going to be the Speaker of the House next time, who’ll win the next election. The common good is about the real people, the people we have to always take into account. And pastors, I think, I wanted to talk to people whose job it is to have re-read the Bible. To get to, to focus on who the real people are here.

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Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, Globalization, Medicare, Religion & Culture, Social Security, Taxes, The Banking System/Sector, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

The Economist on Italy and the Euro: On the edge

This week the shortcomings of this muddling-through were laid bare… Financial markets turned on Italy, the euro zone’s third-biggest economy, with alarming speed. Yields on ten-year Italian bonds jumped by almost a percentage point in two trading days: on July 12th they breached 6%, their highest since the euro was created. The Milan stockmarket slumped to its lowest in two years. Though bond yields subsequently fell back, the debt crisis has clearly entered a new phase. No longer confined to the small peripheral economies of Greece, Ireland and Portugal, it has hurdled over Spain, supposedly next in line, and reached one of the euro zone’s giants. All its members, but especially Germany, face a stark choice.

Consider the stakes. Italy has the biggest sovereign-debt market in Europe and the third-biggest in the world. It has €1.9 trillion ($2.6 trillion) of sovereign debt outstanding, 120% of its GDP, three times as much as Greece, Ireland and Portugal combined””and far more than the €250 billion or so left in the European Financial Stability Facility (EFSF), the currency club’s rescue kitty. Default would have calamitous consequences for the euro and the world economy. Even if the more likely immediate prospect is sustained stress in the Italian bond market, that will surely prompt investors to flee European assets, making the continent’s recovery ever harder. Meanwhile in the background there is the absurd pantomime of Barack Obama and congressional Republicans feuding over how to raise the federal government’s debt ceiling to stave off an American “default”…. That may have distracted American investors briefly; once they realise how much is at stake in Italy, it will not help.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Globalization, Italy, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Kurt Brouwer–Americans distrust a deal on Debt and Default

….Americans are skeptical with good reason and that level of distrust will not go away if all we get is another bipartisan approach to kicking the debt problem down the road. In case you have forgotten, we raised the debt ceiling as recently as February 2010.

When will we gain control of our budget? We routinely hear about trillions in spending cuts, yet we spend more and more each year. Lip service is paid to cutting back, but we all know that spending cuts never, ever happen in Washington DC.

With a slowing economy, the argument is often made that government has to step in and do something. As you can see from the list above, our government has been doing exactly that. Yet, those policies have been ineffective so far.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, America/U.S.A., Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Psychology, Senate, Social Security, Taxes, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

DJN: *DJ S&P Places U.S. 'AAA/A-1+' Rtgs On CreditWatch Negative

DJN: *DJ S&P: At Least 50% Chance Of Lowering US L/T Rtg Within 90 Days

*DJ S&P: US S/T Rtg Watch Reflects View Of Significant Uncertainty Of US Creditworthiness

Ugh.

Posted in * Culture-Watch, * Economics, Politics, Budget, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, Globalization, House of Representatives, Office of the President, Politics in General, President Barack Obama, Senate, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

Moody’s Places U.S. on Review for Downgrade As Debt Talks Stall

The U.S., rated Aaa since 1917, was put on review for the first time since 1995 on concern the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes even though the risk remains low, Moody’s said. The rating would likely be reduced to the Aa range and there is no assurance that Moody’s would return its top rating even if a default is quickly cured.

“It certainly underscores the importance of passing the debt ceiling and not putting us in default status, and making sure there’s a longer term fiscal plan to contain spending and the deficit we’ve been running up over the last few years,” said Anthony Cronin, a Treasury bond trader at Societe General SA in New York, one of the 20 primary dealers that trade with the Federal Reserve. “Maybe it’s the impetus to say we’ll need more of a concession.”

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Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, Federal Reserve, Globalization, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

David Leonhardt–Why Taxes Will Rise in the End

Free lunchism is ultimately the problem with the no-new-taxes pledge that so many politicians have adopted. A refusal to raise taxes, no matter how principled, cannot take us back to the good old days. It would instead lead to a very different American society. For taxes to remain where they are, Washington would need to end Medicare as we know it, end Social Security as we know it, severely shrink the military ”” or do some combination of the above.

“We cannot repeat the past when it comes to the federal budget,” Douglas Elmendorf, director of the nonpartisan Congressional Budget Office, recently wrote. “The aging of our population and the rising cost of health care have changed the backdrop for federal budget policy in a fundamental way.”

The most important part of the recent Republican budget plan, written by Representative Paul Ryan, was that it acknowledged this reality…

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Posted in * Culture-Watch, * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, History, Medicare, Psychology, Social Security, Stock Market, Taxes, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

Sean O'Grady: Ageing Italians on the slow train to ruin

…everyone knows that Italy is on the slow train to ruin. Her public finances have been reasonably well run, but the economic fundamentals are skewed against her. Her poor demographic mean fewer workers ”“ and thus taxpayers and savers ”“ to fund the health and social costs of a greying populous. And, like Portugal and Greece, she is fundamentally uncompetitive, unable to match German levels of productivity and exports.

Il miracolo economico of the 1960s ”“ symbolised by millions of little Fiat 500s pouring out of bustling Turin ”“ was possible because a vast reservoir of underemployed agricultural workers could be lured into the cities. That cannot be repeated.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Italy, Stock Market, The Fiscal Stimulus Package of 2009

(Reuters) EU calls emergency meeting as crisis stalks Italy

European Council President Herman Van Rompuy has called an emergency meeting of top officials dealing with the euro zone debt crisis for Monday morning, reflecting concern that the crisis could spread to Italy, the region’s third largest economy.

European Central Bank President Jean-Claude Trichet will attend the meeting along with Jean-Claude Juncker, chairman of the region’s finance ministers, European Commission President Jose Manuel Barroso and Olli Rehn, the economic and monetary affairs commissioner, three official sources told Reuters.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, England / UK, Euro, Europe, European Central Bank, Greece, Ireland, Italy, Politics in General, Spain, The Banking System/Sector

(AP) Will Changes to Social Security really be included in any Budget Deal?

Overall, the proposal would cut Social Security benefits by $112 billion over the next decade, according to the nonpartisan Congressional Budget Office. It would cut government pensions and veterans’ benefits by $24 billion over the same time period if adopted for them.

Reaction from the president’s own party was swift Thursday, raising questions about whether Obama can keep Democrats on board if he agrees to cuts in Social Security. House Democratic leader Nancy Pelosi said her caucus won’t support any package that includes Social Security cuts.

“Do not consider Social Security a piggy bank for giving tax cuts to the wealthiest people in our country,” Pelosi said. “We are not going to balance the budget on the backs of America’s seniors.”

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Posted in * Culture-Watch, * Economics, Politics, Aging / the Elderly, Budget, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, House of Representatives, Medicare, Politics in General, Senate, Social Security, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The National Deficit, The U.S. Government

Religion and Ethics Newsweekly–A Moral Budget

[BOB] ABERNETHY: But all the moral debate has not made compromise easy.

[MICHAEL] GERSON: I think moral motivations in politics are very important. But when you claim that your own views somehow have a divine sanction, you’ve cut off all political argument. This should be an argument about outcomes, what is really best for the justice and decency of a society. I think a limited government is important to that, and I think a government that provides some of the most basic needs for the most vulnerable people in society is important to that as well. That’s where a lot of Americans are.

ABERNETHY: Alan Simpson thinks his former colleagues will head off a national crisis and that their constituents will accept the need for sacrifice.

[ALAN] SIMPSON: I think there are a lot more heroes in Congress than we recognize.

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Posted in * Culture-Watch, * Economics, Politics, Budget, Credit Markets, Currency Markets, Economy, Ethics / Moral Theology, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Religion & Culture, Senate, Social Security, Stock Market, The National Deficit, The U.S. Government, Theology

John Redwood: Greece cannot borrow its way of this debt crisis

The reason a currency union needs a political union is simple. The centre has to have some way of stopping parts of the union from borrowing too much in the common currency at the common interest rate. If some borrow too much they are free riders on the backs of the more prudent areas.

If they go on borrowing too much they undermine the credit rating of the whole area, and force up the cost of borrowing for the prudent parts. To achieve discipline, the centre also needs to send subsidies and payments to the poorer parts, to compensate them for their inability to devalue to price themselves back into a competitive position.

Today the single currency system is suffering from the double stresses of too much borrowing by countries such as Greece and Portugal, who have spent too much and raised too little in tax, and from the need of countries like Ireland to bail out their overstretched banking systems….

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, England / UK, Euro, Europe, European Central Bank, France, Germany, Greece, Ireland, Politics in General, Portugal, Spain, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--

Mark Shields and Michael Gerson on the Washington Deficit Debate

MARK SHIELDS: On revenue.

The reality is this, that every single group, whether it’s Simpson-Bowles, whether it’s Alice Rivlin and Pete Domenici, whoever it is — semi-serious, we probably should have said — yes, there have to be budget cuts to deal with the deficit problem and the debt, but there have to be revenue increases.

It’s become a dogma with Republicans now that anybody who votes for a tax increase is no longer a member of the club or the party….

MICHAEL GERSON: I think — I think Democrats are being equally unreasonable on the issue of entitlements.

This is our long-term spending challenge. It’s not that we tax too little. It’s that we have expensive entitlement commitments, an aging population, and health care inflation that have made that portion of the budget completely unsustainable….

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Posted in * Culture-Watch, * Economics, Politics, Budget, Credit Markets, Currency Markets, Economy, Globalization, Medicare, Social Security, Stock Market, Taxes, The Banking System/Sector, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

(ENS) Episcopalians stand up for ethical behavior and justice in the financial world

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Posted in * Anglican - Episcopal, * Economics, Politics, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Episcopal Church (TEC), Ethics / Moral Theology, Stock Market, The Banking System/Sector, Theology

Greece approves austerity bill, setting in motion brutal budget cuts

Greece has approved an austerity bill that helps pull the debt-ridden country back from the brink of an immediate default. After days of public unrest and impassioned debate, the Greek parliament voted 155-138 on Wednesday in favor of the controversial bill, which authorizes $40 billion in brutal budget cuts and tax hikes over the next several years for a nation already reeling from previous belt-tightening measures.

The tense legislative showdown came as the country continued to squirm in the grip of a 48-hour nationwide strike and as tens of thousands of angry protesters thronged downtown Athens in noisy opposition to the austerity package. Police in riot gear scuffled with some demonstrators and tried to contain the kind of violence that on Tuesday left dozens of people injured, shop windows smashed and tourists running to escape tear-gas fumes.

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Posted in * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, G20, Greece, Politics in General, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--