Category : The United States Currency (Dollar etc)

(NY Times) Treasury Secretary Sends Warning on Debt Limit

Treasury Secretary Jacob J. Lew warned Congress on Wednesday that the government would most likely exhaust its ability to borrow in late February, setting up yet another fiscal showdown with Republicans, and this time earlier than congressional leaders had anticipated.

In a letter to Speaker John A. Boehner and the other top three congressional leaders, Mr. Lew said a surge of February spending, mainly tax refunds for 2013, would leave the Treasury with little room to maneuver after the official debt limit is reached on Feb. 7.

The letter amounts to an early alarm bell, coming just weeks after Congress passed its first bipartisan budget and comprehensive spending bill in years. Those bills were supposed to serve as a cease-fire in the budget wars that have rattled the country and the economy since Republicans took control of the House in 2011.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, America/U.S.A., Budget, Economy, Ethics / Moral Theology, Federal Reserve, Globalization, History, House of Representatives, Medicaid, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Taxes, The National Deficit, The U.S. Government, The United States Currency (Dollar etc), Theology

(FT) Analysts see US crisis deferred not solved

Standard & Poor’s is only raising half a cheer at the deal:

“We believe that to date, the shutdown has shaved at least 0.6 per cent off of annualised fourth-quarter 2013 GDP growth, or taken $24bn out of the economy.

“The short turnround for politicians to negotiate some sort of lasting deal will probably weigh on consumer confidence, especially among government workers that were furloughed. If people are afraid that the government policy brinkmanship will resurface again, and with it the risk of another shutdown or worse, they’ll remain afraid to open up their cheque books. That points to another Humbug holiday season.”

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Posted in * Culture-Watch, * Economics, Politics, Aging / the Elderly, Budget, Economy, Health & Medicine, House of Representatives, Medicaid, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Taxes, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

(FT) Gavyn Davies–Another year in thrall to the central bankers

Understanding the developing attitude of the central banks, and the effects of their actions, obviously remains central for investors in all financial assets. The “big picture” for global financial assets, involving very low government bond yields and a gradual shift of risk appetite into credit and equities, is unlikely to change until one of two events takes place.

The first would be a decision by the central bankers themselves that the era of unlimited quantitative easing must end, either because of the risk of inflation and asset price bubbles, or because of concerns about fiscal dominance over the monetary authorities. The second would be a realisation by the markets that further action by the central bankers is irrelevant because they have run out of effective ammunition. Either of these events would probably remove the central prop from the equity bull market which began in March, 2009, but neither seems very likely in 2013.

There is certainly no sign that the central bankers themselves will call a halt to the extension of their balance sheets.

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, America/U.S.A., Asia, China, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Euro, Europe, European Central Bank, Federal Reserve, Globalization, Japan, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

Downgrade of Debt Ratings Underscores Europe’s Woes

Standard & Poor’s downgraded the credit ratings of France, Italy and seven other European countries on Friday, a move that may have more symbolic than fundamental financial impact but served as a reminder that Europe’s economic woes were far from over.

Another memory jog came Friday from Greece, the original source of Europe’s debt troubles. Talks hit a snag between the new Greek government and the banks and other private investors that Athens hopes will agree to take losses on their debt so that Greece can avoid a default.

Together, those developments underscore that even as Europe’s debt turmoil enters its third year, no clear solutions are yet in sight ”” despite recent signs that a new lending program by the European Central Bank might be easing financial market pressures.

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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, G20, Globalization, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

CBO: Stimulus hurts economy in the long run

The Congressional Budget Office on Tuesday downgraded its estimate of the benefits of President Obama’s 2009 stimulus package, saying it may have sustained as few as 700,000 jobs at its peak last year and that over the long run it will actually be a net drag on the economy.

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Posted in * Culture-Watch, * Economics, Politics, Credit Markets, Economy, Federal Reserve, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, The Fiscal Stimulus Package of 2009, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

Austerity Faces Test as Greeks Question Their Ties to Euro

The crisis of the euro zone has finally hit the potholed road of real politics, with the Greeks now openly questioning whether their commitment to Europe and its single currency still matters more to them than control over their own future and economic well-being.

During the two-year financial crisis, the wealthier countries of northern Europe, led by Germany, have insisted that their heavily indebted brethren in the south radically cut spending in return for emergency loans. They have stuck to that prescription even though austerity has undermined growth and increased unemployment in Greece, Spain, Portugal and now Italy, betting that people in those countries will swallow the harsh medicine because their only alternative is to default and possibly leave the euro zone altogether.

The turmoil in the government of Prime Minister George A. Papandreou means that Greece is about to call that bet. Many Greek politicians appear to be calculating, at this late stage, that they have more to lose by sticking to Germany’s terms than by risking a messy default, and even going it alone with their old currency, the drachma, outside the euro zone.

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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, Federal Reserve, Foreign Relations, France, G20, Germany, Greece, Politics in General, Stock Market, The Banking System/Sector, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc), Treasury Secretary Timothy Geithner

(Christianity Today) Ken Walker–Missionary Money: Easier to Give, Worth Less than Ever

Financial turmoil in global markets continues to play havoc with the value of the U.S. dollar, but technology continues to make the transfer of donor dollars to missionaries quicker and easier.

American missionary income in China has dropped 25 percent in recent years because of the dollar’s decline against the Chinese yuan, said a missionary leader who requested anonymity. “In 24 years of missionary ministry, I have never seen things as tough as they are now.”

“It’s a complaint we hear almost every day,” says Bill Bray of Christian Aid Mission, which supports indigenous missionaries in 122 nations. “They need more money because of the exchange rate.”

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Posted in * Christian Life / Church Life, * Culture-Watch, * Economics, Politics, Credit Markets, Economy, Federal Reserve, Globalization, Missions, Parish Ministry, Stewardship, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

U.S. rating likely to be downgraded again: Merrill

The United States will likely suffer the loss of its triple-A credit rating from another major rating agency by the end of this year due to concerns over the deficit, Bank of America Merrill Lynch forecasts.

The trigger would be a likely failure by Congress to agree on a credible long-term plan to cut the U.S. deficit, the bank said in a research note published on Friday.

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Posted in * Economics, Politics, Budget, Credit Markets, Currency Markets, Economy, Federal Reserve, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, Senate, Social Security, Taxes, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

John Mauldin on the current Economy–Tough Choices, Big Opportunities

We’re just stuck?

If we don’t deal with it ”“ if we don’t proactively say we’re going to get our deficit under control ”“let me put it this way: My personal belief is that if we do proactively get our long-term budget issues under control, the bond market will say, “Okay, you’re credible and we will buy your bonds, because you have put yourself on a credible path ”“ whether it’s through cuts, whether it’s through tax increases, however you want to do it ”“ but you have to do it. But you have shown us a credible way to get to the place where the growth rate of your deficit is below the growth rate of nominal GDP.”

But if we don’t do that, my wine bottle of pain becomes a jeroboam and we end up downing it all at once.

That sounds ugly.

It is. It will force budget cuts; it will force tax increases of the magnitude that no one is ready to contemplate. We’re talking cuts in Medicare, cuts in education, in defense, in spending of all kinds. That would create a depression, a true depression that would last 4-5 years, push unemployment to 20%-25%….

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Posted in * Culture-Watch, * Economics, Politics, * International News & Commentary, --European Sovereign Debt Crisis of 2010, America/U.S.A., Asia, Budget, Consumer/consumer spending, Credit Markets, Currency Markets, Economy, Europe, Globalization, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Medicare, Personal Finance, Social Security, Stock Market, 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)

Global Agenda: Undermining of Central Banks Leaves Markets Adrift

This year, volatility has soared and share prices have fallen sharply, in part because few believe there is a Bernanke put, or, for that matter, a Trichet put. It is far from clear that the authorities could stem a new panic, and even less clear that many would be willing to try.

In other words, the slogan for markets as the International Monetary Fund and World Bank meet this week in Washington could well be, “You’re on your own. Don’t count on anybody to bail you out.”

The situation is thus drastically different from that of three years ago, when I.M.F.-World Bank meetings served as a forum to find joint strategies to ameliorate the financial crisis that had followed the collapse of Lehman Brothers.

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Posted in * Culture-Watch, * Economics, Politics, Credit Markets, Currency Markets, Economy, Euro, European Central Bank, Federal Reserve, Globalization, Politics in General, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

(CSM) Can 'super committee' play fair as it tries to control national debt?

The Joint Select Committee on Deficit Reduction, aka super Congress or super committee, is Congress’s answer to its own inability to break the hold of partisan gridlock that took America to the brink of default on Aug. 2, prompting the first-ever downgrade of the nation’s credit rating.

The panel, which on Thursday holds an organizational meeting open to the public, has a sweeping mandate to propose cuts to spending and entitlements and recommend tax reform by Nov. 23. Congress must vote the package up or down ”“ no amendments or filibuster ”“ by Dec. 23, or trigger a $1.2 trillion package of automatic spending cuts, equally divided between defense and domestic spending.

“Never has Washington had an all-or-nothing panel that is empowered and backed by a firm timeline like this one is,” says John Ullyot, a public-affairs consultant in Washington and former GOP Senate staffer. “The starter pistol will fire right after Labor Day.”

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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, The National Deficit, The U.S. Government, The United States Currency (Dollar etc)

Federal Reserve Chairman Ben Bernanke unlikely to announce big new plans at Jackson Hole

In this year’s speech, he is likely to put particular emphasis on what needs to be done to repair the U.S. economy over the longer run, including lowering long-term deficits. The title of the speech, in fact, is “Near- and Long-Term Prospects for the U.S. Economy.”

While Bernanke has said that Congress should not cut the budget deficit too quickly, lest this austerity undermine the weak economic recovery, he has previously argued that a long-term plan to put the government’s spending in line with its revenue could help instill confidence. Indeed, Deutsche Bank chief economist Peter Hooper said in a research note that the need for longer-term adjustments in the economy could be another argument against new Fed intervention.

“Any action the Fed takes at this point may give the markets no more than a temporary lift and would not resolve the more fundamental problems that are weighing on the economy,” Hooper said.

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Posted in * Economics, Politics, Consumer/consumer spending, Corporations/Corporate Life, Credit Markets, Currency Markets, Economy, Federal Reserve, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Stock Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The U.S. Government, The United States Currency (Dollar etc)

(Washington Post) The incredible, shrinking debt deal in one graph

Take a look.

Posted in * Economics, Politics, Budget, Consumer/consumer spending, Corporations/Corporate Life, Economy, House of Representatives, Medicare, Office of the President, Politics in General, President Barack Obama, 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, The United States Currency (Dollar etc)

(RNS) Catholic Bishops Urge House Against Steep Budget Cuts

The nation’s Roman Catholic bishops are urging the GOP-led House to reject a cuts-only approach to the budget as Washington tries to avert an unprecedented government default on its multi-trillion-dollar debts.

“A just framework for future budgets cannot rely on disproportionate cuts in essential services to poor persons,” wrote Bishop Stephen Blaire of Stockton, Calif., and Bishop Howard Hubbard of Albany, N.Y., in a Tuesday (July 26) letter to House members.

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Posted in * Culture-Watch, * Economics, Politics, * Religion News & Commentary, Budget, Consumer/consumer spending, Corporations/Corporate Life, Economy, House of Representatives, Housing/Real Estate Market, Labor/Labor Unions/Labor Market, Medicare, Office of the President, Other Churches, Politics in General, President Barack Obama, Religion & Culture, Roman Catholic, 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)

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