German Finance Minister Wolfgang Schaeuble has asked a panel of advisers to look into reform proposals for France, concerned that weakness in the euro zone’s second largest economy could come back to haunt Germany and the broader currency bloc.
Two officials, speaking on condition of anonymity, told Reuters this week that Schaeuble asked the council of economic advisers to the German government, known as the “wise men”, to consider drafting a report on what France should do.
Talks to agree the EU’s 2013 budget have collapsed, after negotiators from the EU and member states were unable to agree on extra funding for 2012.
The EU Commission and European Parliament had asked for a budget rise of 6.8% in 2013.
But most governments wanted to limit the rise to just 2.8%.
…historically, voters have given a second term to incumbent presidents who preside over even modest economic growth during an election year.
That pattern appears to have held for Obama. If the economy is not exactly roaring ahead, it improved steadily over the course of the year.
“It was never going to be a landslide,” said John Sides, a political science professor at George Washington University. “But it was always his race to lose.”
To those who were surprised that the European Union received the Nobel Peace Prize, I say: “Think twice.” This was not only a deserved award for Europe’s contribution to bringing peace and stabilizing democracies in the recent past. The Nobel Committee was also sending a clear warning to contemporary leaders. I could almost hear them saying: “On this difficult odyssey, don’t abandon ship. In today’s world, the EU is too valuable to squander.”
It was an indirect but powerful rebuttal to the dangerous nationalist and populist rhetoric some politicians have adopted when describing the recent financial crisis.
This message couldn’t have come at a better time.
Since the Fresh & Easy grocery chain was founded five years ago, it has opened 150 stores in California and positioned itself as a hip, socially responsible company.
A cross between Whole Foods and Trader Joe’s, the company brags that its house brands have no artificial colors or trans fats, that two-thirds of its produce is grown locally and that its main distribution center is powered by a $13 million solar installation.
But in one crucial respect, Fresh & Easy is just like the vast majority of large American retailers: most employees work part-time, with its stores changing many of their workers’ schedules week to week.
The middle class has been caught in an economic vise, trying to pay 2012 prices with paychecks that haven’t grown since the good times went bust ”” or even earlier.
Across the nation, family income was down 8 percent last year from what it was in 2000. And in South Carolina, the median income last year was just over $40,000.
That’s the lowest wages have been in the Palmetto State since 1985, according inflation-adjusted figures from the U.S. census.
Europe’s economic woes are washing over U.S. multinational companies, contributing to a season of weak corporate earnings.
Domestic sales are growing, as the U.S. housing market and consumer confidence recover. But China’s economy has slowed, robbing U.S. companies of their most reliable growth engine of recent years.
Almost uniformly, however, U.S. companies reporting third-quarter results identify Europe as the weakest link in the global economic chain.
For the first time since the Great Recession hit, American households are taking on more debt than they are shedding, an epochal shift that might augur a more resilient recovery.
For two of the last three quarters, American households’ total outstanding borrowing on things like credit cards, mortgages and auto loans has increased after falling for 14 consecutive quarters before then. Some economists even see an end to the long, hard process of deleveraging ”” as they refer to the cutting of debt relative to income or the nation’s economic output. That process, they say, has been a central reason for the extraordinary sluggishness of the recovery.
“We’re at an inflection point,” said Kevin Logan, the chief United States economist for HSBC. “Debt is less of a burden” for households, he said.
Deficit-reduction principles backed by more than 80 U.S. chief executive officers are so broad that anti-tax advocate Grover Norquist and an ally of President Barack Obama both claim their plans could satisfy the standards.
The Campaign to Fix the Debt, with more than $30 million in backing, announced an expanded list of supporters yesterday, including the leaders of Verizon Communications Inc. (VZ), Cisco Systems Inc. (CSCO) and Microsoft Corp. (MSFT) On the most vexing issue — whether tax increases should be part of a deal — the principles refer to lower tax rates and higher revenue, not higher taxes.
Read it all. You can also find the CEO Debt Concerns Press Release here.
The financial markets have been notably calm of late. Stock indexes have ticked upwards and interest rates on sovereign bonds have drifted downwards. The euro has also remained relatively stable against the dollar. And investor panic seems to have dissipated.
But appearances can be deceiving, said German Finance Minister Wolfgang Schäuble on Tuesday. “I’m not so sure that the worst of the crisis is behind us,” he said at a mechanical engineering conference in Berlin, warning that reform efforts needed to be re-doubled to ensure that trust in the euro returns.
His comments were echoed by Yves Mersch, a member of the European Central Bank Governing Council who was also present at the event. He warned that even if calm had returned to the markets, it could be deceptive. “The bleeding has been stopped, but the patient is not yet in the clear,” he said.
The federal government has filed another mortgage-fraud lawsuit against Bank of America, contending that defective loans generated by the bank’s Countrywide Financial Corp. subsidiary caused mortgage finance giants Fannie Mae and Freddie Mac to lose more than $1 billion.
A statement Wednesday from the office of U.S. Atty. Preet Bharara in New York said that after the subprime mortgage market collapsed in 2007, Calabasas-based Countrywide devised a loan-processing system called “Hustle” to “process loans at high speed and without quality checkpoints.”
Taxes and government spending. Health care. Immigration. Financial regulation.
They are the issues that have dominated the political debate in recent years and have played a prominent role in this presidential campaign. But in many ways they have obscured what is arguably the nation’s biggest challenge: breaking out of a decade of income stagnation that has afflicted the middle class and the poor and exacerbated inequality.
Many of the bedrock assumptions of American culture ”” about work, progress, fairness and optimism ”” are being shaken as successive generations worry about the prospect of declining living standards. No question, perhaps, is more central to the country’s global standing than whether the economy will perform better on that score in the future than it has in the recent past.
Americans in their late 30s are now the group most likely to doubt they will be financially secure after retirement, a major shift from three years ago when baby boomers nearing retirement age expressed the greatest worry.
The survey findings by the Pew Research Center, released Monday, reflect the impact of a weak economic recovery beginning in 2009 that has shown stock market gains while housing values remain decimated….
“My biggest fear is not being able to retire,” [37 year old Nicole] Gilliard said as she came out of the courthouse on Meeting Street after work Monday. “I have a 5-year-old, and my biggest fear is that I’m going to have to keep working to put her through school.”
For 33 years, Sánchez Gordillo has been mayor of Marinaleda, pop. 2,700, another farming settlement about 100 miles west of Jódar. Like Jódar, Marinaleda is mostly inhabited by jornaleros. Over the decades, Sánchez Gordillo has transformed the poor village into an islet of social justice and relative prosperity, with almost full employment through communal farming, low taxes, a salary of €1,200 ($1,572), food and housing considered as rights, and “direct democracy” exercised through frequent general assemblies. Sánchez Gordillo and his townsmen launched their movement to build what he calls “a communist utopia” after the death of general and dictator Francisco Franco in 1975, occupying land owned by a member of the royal family and distributing it for communal ownership as well as taking over local airports.
His efforts in Marinaleda long ago earned him a regional following, but Sánchez Gordillo and his lieutenant, the 57-year-old Diego Cañamero, the SAT union’s national spokesman, have gained renown in recent months with a series of controversial protests against the austerity measures embraced by Prime Minister Mariano Rajoy and the Spanish government. On Aug. 7, the two led union members on raids on Carrefour (CA) and Mercadona supermarkets, leaving the stores with shopping carts full of “expropriated” food they gave away to the hungry poor.
An exit poll showed Mr. Rajoy’s conservative party winning 39 or 40 of the parliament’s 75 seats in his native Galicia, a gain of at least one seat over the Spanish Socialist Party and two smaller rivals. He had touted Galicia as a regional model for the economic-austerity program his government has pursued amid rising popular protest in the rest of Spain.
In the Basque Country, another exit poll showed a surprisingly strong second-place finish by a new radical separatist coalition, apparently enough to help a more-moderate nationalist party oust the ruling coalition between Mr. Rajoy’s party and the Spanish Socialist Workers Party.
The exit polls, taken by the regional government-owned television networks in Galicia and Basque Country, are widely regarded as reliable.
From an interview with the authors of the Simpson-Bowles reform plan and Goldman Sachs CEO Lloyd Blankfein:
“…We just met with — a dozen of the largest high-tech company CEOs in the country. Not only are they hoarding cash. All their customers, all their suppliers are. They’re scared to death we’re going to go over this cliff and it could be a catastrophe….”
You can find a summary article to read there, it has briefer video links, but the best use of your time is to watch the full interview over here or read the transcript (about 42 1/2 minutes). Also, David Brook’s piece on the debt indulgence is worth a careful revisit.
No matter who gets elected president next month, the United States economy in 2013 will have only tepid growth.
Does that sound like this year all over again? Yes, indeed.
At least that’s the view of 44 professional economic forecasters, members of the National Association of Business Economics, who on Monday released their outlook for the coming year.
Canadian household debt has shot past the sky-high levels that foreshadowed the U.S. housing bust.
But it’s taken a statistical revisions by Statistics Canada to get there.
Canadians’ debt-to-income ratio reached 163.4 per cent in the second quarter, up from 161.7 per cent at the end of last year.
We do not wish to distress you Only to appeal to you.
Blessed are those who are persecuted because of righteousness, for theirs is the kingdom of heaven.
We stand here as Occupiers, as women, Queers, disabled, grandmas, young, old, as women of all faiths and none in solidarity with all other groups who are marginalised by economic injustice.
Even when times are good women, along with our children, are usually those who suffer the most. In times of economic crisis our inequality is amplified but we refuse to be victims.
Four women who chained themselves to the pulpit of St Paul’s cathedral cut through the bolts after six hours on the advice of police, avoiding arrest…
he women wrapped chains around their waists after a prayer that Church officials had invited them to give. One, Josie Reid, chained herself to her wheelchair.
The action came on the anniversary of the Occupy protest last year when protesters took over the square outside.
A potentially serious complication has arisen in California’s latest effort to avoid billions in spending cuts, which threaten the state’s education and welfare systems.
Gov. Jerry Brown’s Proposition 30 intends to forestall “draconian” budget cuts by temporarily raising taxes, including sales taxes and income taxes on the wealthy. The initiative could largely determine his legacy, as well as the state’s fiscal health for at least a decade. Moreover, if successful, Prop. 30 could begin to shift the national conversation on taxes after decades of extreme antitax sentiment across the country.
Polls show that a thin majority of state voters support Prop. 30. But that support could be undercut by another proposition that aims to raise taxes for public education. Molly Munger, the millionaire behind the rival initiative, has even suggested she might start airing comparison ads arguing why voters should vote for her proposition, not Governor Brown’s Prop. 30.
The greatest risk to US financial markets stems from other countries’ willingness (or lack thereof) to continue to hold dollar reserves as the value depreciates. If those nations suspect that the US cannot maintain the strength of our currency, they will begin to drain assets from American banks ”“ seeking safer havens for their wealth. That could entail trading US treasury bonds for perceived “safer” currencies such as those of New Zealand or Canada or even switching to an entirely different asset class such as gold or silver.
While there may not be any significant signs of capital flight yet, just look east. The Chinese are the largest, external holder of US debt. And they’re already heading down this path ”“ dropping the share of their portfolio comprised of US dollar assets from 74 to 54 percent in the last five years. It may very well be a harbinger of what’s to come.
Attempting to counter fears fanned by trends like this, Bernanke talks of a “soft landing…”
His job was to stand with customers in their back yards, suntanned and smiling, and look beyond the problems of the past several years to see the opportunities in every suburban cul-de-sac. How about a pool and a sauna next to the patio? Or a custom waterfall near the property line?
“The possibilities here are as big as you can dream them,” he liked to tell customers, gesturing at their yards.
In a country built on optimism, Frank Firetti was the most optimistic character of all: the American salesman ”” if not the architect of the American dream then at least its most time-honored promoter. He believed that you could envision something and then own it, that what you had now was never as good as what you would have next. Since the country was founded, it had climbed ever upward on the spirit of people like him, on their vision, on their willpower, on their capitalism. But now, when he traveled from house to house to sell his monuments to American success, he sensed that spirit waning….
The reality is that more than three years into this weakest of economic recoveries, 12.1 million Americans are still out of work””nearly 23 million by the broader definition that includes those who have stopped looking or can’t find full time work””and the labor participation rate is still down to 1981 levels at 63.6%. Hooray!
Of the 114,000 new jobs, 104,000 were in the private economy, and all of the 86,000 in upward revisions for July and August came in government jobs. Job growth for 2012 has averaged 146,000 a month, which is down from 153,000 in 2011.
Manufacturing employment fell again (down 38,000 in the last two months) further dampening one of the few bright spots in this recovery. A still abysmal 40.1% of the unemployed in America have been jobless for six months or more. Such a job market is anemic by any historic measure for this stage in an expansion and reflects continuing slow GDP growth in the 1%-2% range.
Greece is teetering on the edge of collapse with its society at risk of disintegrating unless the country’s near-empty public coffers are shored up with urgent financial aid, the country’s prime minister has warned.
Almost three years after the eruption of Europe’s debt drama in Athens, the economic crisis engulfing the nation has become so severe that democracy itself is now imperiled, Antonis Samaras said.
“Greek democracy stands before what is perhaps its greatest challenge,” Samaras told the German business daily Handelsblatt in an interview published hours before the announcement in Berlin that Angela Merkel will fly to Athens next week for the first time since the outbreak of the crisis.
The U.S. unemployment rate fell sharply in September to its lowest level since January 2009, suggesting that summer job growth was stronger than previously thought and providing new fodder for a presidential race that has focused on competing views of the nation’s economic health.
Data released Friday portrayed a labor market that has perked up a bit since the spring but is still growing modestly. The unemployment rate slid to 7.8%, the Labor Department said, falling below 8% for the first time since President Barack Obama’s inauguration. The rate has fallen half a percentage point since July, when it was 8.3%.
Read it all. Mish did an excellent job in his analysis. Blog readers know I prefer U-6, which I consider the most representative rate–it stayed the same month over month–KSH
Federal Reserve officials debated the risks of beginning an ambitious new stimulus policy before ultimately giving it a green light, according to minutes of the central bank’s September meeting released Thursday.
The minutes show officials concerned during their two-day meeting that without further action, the unemployment rate could remain stubbornly high. Officials were also troubled by signs of slowing growth abroad, including in China, and the possibility of a so-called fiscal cliff at home.
According to the non-partisan Tax Policy Center, the U.S. is on the threshold of one of the largest tax increases in history, a tax hike that could average $3,500 for every American household.
Without actions from Congress, the report says taxes will go up next year by 20 percent, or $536 billion overall. It will hit Americans at every income level including those living below the poverty line. For a middle income family making $40,000 per year, the tax increase is $2,000.
“The Spanish were a bit hesitant but now they are ready to request aid,” a senior European source said. Three other euro zone senior euro zone sources confirmed the shift in the Spanish position, all speaking on condition of anonymity because they were not authorised to discuss the matter.
German Finance Minister Wolfgang Schaeuble has said Spain is taking all the right steps to overcome its fiscal problems and does not need a bailout, arguing that investors will recognise and reward Spanish reforms in due course.
Privately, several European diplomats and a senior German source said Chancellor Angela Merkel preferred to avoid putting more individual bailouts for distressed euro zone countries to her increasingly reluctant parliament.
Americans have poured record amounts of money into savings accounts even though interest rates are at historic lows, new federal data show, a sign that average people may be missing out on a booming stock market and recovering real estate sector.
The total amount in those accounts climbed nearly 5 percent to $6.9 trillion in the spring, the highest level recorded since the Federal Reserve launched its regular reports on the flow of money in the economy in 1945. At the same time, other data show that Americans are fleeing the stock market and avoiding the purchase of new homes.
The pattern suggests that Americans, wounded by the financial crisis and scared by an uncertain job market, do not want to take any risks with their money ”” even as the government is encouraging risk-taking.