Sunday, February 28, 2010

Head of IMF Proposes New Reserve Currency

IMF's Strauss-Kahn suggests IMF may one day provide global reserve asset
By HARRY DUNPHY Associated Press Writer
WASHINGTON February 26, 2010 (AP)

Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.

"That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.

Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF's special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.

He said having other alternatives to the dollar "would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country."


California is a greater risk than Greece, warns JP Morgan chief

California is a greater risk than Greece, warns JP Morgan chief
Jamie Dimon, chairman of JP Morgan Chase has warned American investors should be more worried about the risk of default of the state of California than of Greece's current debt woes.

By James Quinn, US Business Editor in New York

Mr Dimon told investors at the Wall Street bank's annual meeting that "there could be contagion" if a state the size of California, the biggest of the United States, had problems making debt repayments. "Greece itself would not be an issue for this company, nor would any other country," said Mr Dimon. "We don't really foresee the European Union coming apart." The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state's $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

Thursday, February 25, 2010

New home sales drop 11 percent in January, new low

WASHINGTON (AP) -- Sales of new homes plunged to a record low in January, underscoring the formidable challenges facing the housing industry as it tries to recover from the worst slump in decades.

The Commerce Department reported Wednesday that new home sales dropped 11.2 percent last month to a seasonally adjusted annual sales pace of 309,000 units, the lowest level on records going back nearly a half century. The big drop was a surprise to economists who were expecting a 5 percent increase over December's pace.

Monday, February 22, 2010

Obama administration and Democratic Congress : “not industry friendly"

Internal Toyota documents derided the Obama administration and Democratic Congress as “activist” and “not industry friendly," a revelation that comes days before the giant automaker's top executives testify on Capitol Hill amid a giant recall.

According to a presentation obtained under subpoena by the House Oversight and Government Relations committee, Toyota referred to the “changing political environment” as one of its main challenges and anticipated a "more challenging regulatory" environment under the Obama administration's purview.

Read more:

Tuesday, February 16, 2010

Thomas Hoenig, president of the Federal Reserve Bank of Kansas City:The US must fix its growing debt problems or risk a new financial crisis

Lone voice warns of debt threat to Fed
By Alan Rappeport in Washington

Published: February 16 2010 20:23 Last updated: February 16 2010 20:23

The US must fix its growing debt problems or risk a new financial crisis, Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, warned on Tuesday, adding a mounting deficit could spur inflation.

Mr Hoenig said that rising debt was infringing on the central bank’s ability to fulfil its goals of maintaining price stability and long-term economic growth. “Stunning” deficit projections were putting political pressure on the Fed to keep interest rates low, infringing on its independence at the risk of inflation, he said.

“Without pre-emptive action, the US risks its next crisis,” Mr Hoenig said in a speech at the Pew-Peterson Commission on Budget Reform.

He was the only Fed member who dissented at last month’s meeting against language indicating that interest rates should remain near zero for an “extended period”.

On Tuesday he said that the worst option for the US was a scenario where the government “knocks on the central bank’s door” and asks it to print more money. Instead, the administration must find ways to cut spending and generate revenue. He called for a “reallocation of resources” and noted that the process would be painful and politically inconvenient.

The US budget deficit is projected to be $8,000bn (€5,800bn, £5,000bn) in the next decade. Barack Obama, US president, recently lifted the government’s borrowing authority to $14,300bn.

see the full story ...

Saturday, February 13, 2010

"psychology of looming collapse”

Greece turns on EU critics

By Kerin Hope in Athens, Quentin Peel in Berlin and Tony Barber in Brussels

Published: February 12 2010 20:32 Last updated: February 12 2010 20:50

Greece on Friday unleashed a fierce attack on its European Union partners, accusing them of creating a “psychology of looming collapse” a day after they pledged support for the country’s crisis-hit government.

George Papandreou, Greek prime minister, said that, in the eurozone’s first big test, Greece had become “a laboratory animal in the battle between Europe and the markets”.

In a televised address to his cabinet, he criticised EU members for sending “mixed messages about our country . . . that have created a psychology of looming collapse which could be self-fulfilling”.

Mr Papandreou blamed the George Papandreou, Greek prime minister for failing to crack down on the previous conservative government’s “criminal record” in falsifying statistics. “This has undermined the responsibility of the European institutions with international markets,” he said.

His outburst is likely to infuriate the very leaders whose help Mr Papandreou needs. It came as it emerged there would be no more talk of financial assistance until Athens had persuaded the EU that it had a sustainable austerity programme in place.

Deepening slump

Greece’s recession has been deeper than reported, with the fourth quarter of last year seeing another turn for the worse – raising more doubts over whether it can meet its targets of cutting public-sector deficits. Greek gross domestic product contracted by 0.8 per cent in the final three months of last year, by far the sharpest decline reported so far by a eurozone country.

That followed declines of 1 per cent, 0.3 per cent and 0.5 per cent in the first, second and third quarters of the year.

Previous estimates had shown falls of 0.5 per cent, 0.1 per cent and 0.4 per cent. The pace at which Greek GDP dropped last year could also cast doubt on the government’s prediction that GDP will fall by just 0.3 per cent in 2010.

Germany is insisting Athens bears initial responsibility for restoring confidence in Greece. Angela Merkel, German chancellor, resisted French efforts to come up with an explicit bail-out package at Thursday’s summit of EU leaders in Brussels.

Officials in Paris said Ms Merkel’s insistence on additional efforts by Greece to cut its budget deficit came close to thwarting agreement at the summit. According to sources in Athens, she called for a rise in Greek value-added tax of 1 per cent, in addition to extra spending cuts. Herman Van Rompuy, EU president, drafted a compromise before the summit started.

Ms Merkel’s tough stance has overwhelming political and popular support in Germany.

Government officials say they are also constrained by constitutional court rulings, which insist on strict adherence to fiscal and monetary stability criteria in the eurozone .

European single currency is facing an 'inevitable break-up'

Collapse of the euro is 'inevitable': Bailing out the Greek economy futile, says FRENCH banking chief

By Sam Fleming and Tim Shipman

Last updated at 1:07 PM on 13th February 2010

The European single currency is facing an 'inevitable break-up' a leading French bank claimed yesterday.

Strategists at Paris-based Société Générale said that any bailout of the stricken Greek economy would only provide 'sticking plasters' to cover the deep- seated flaws in the eurozone bloc.

The stark warning came as the euro slipped further on the currency markets and dire growth figures raised the prospect of a 'double-dip' recession in the embattled zone.

Saturday, February 06, 2010

The Disappearing Story of Tax Increases on the Middle Class

Many of you heard about a story that ran on Reuters yesterday about the coming Middle-Class tax increases. Of course in Washington they don’t call it a tax increase – they are not renewing the Bush Tax Cuts and tax rates will therefore increase when the cuts come to an end – but in Washington, that is not considered raising taxes. The White House, unhappy with the story, asked (or told) Reuters to remove the story. By yesterday evening the story was no longer available. It was replaced with a message saying the story was withdrawn and would be replaced with a new story later in the week.

There are two attachments to this email.
1) a screen shot of the actual story, and
2) a screen shot of what appeared after the story was obediently removed by Reuters

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Wednesday, February 03, 2010

Internal Revenue Service (IRS) intends to purchase sixty Remington Model 870 Police RAMAC 12 gauge pump-action shotguns

Internal Revenue Service (IRS) intends to purchase sixty Remington Model 870 Police RAMAC 12 gauge pump-action shotguns

The Internal Revenue Service (IRS) intends to purchase sixty Remington Model 870 Police RAMAC #24587 12 gauge pump-action shotguns for the Criminal Investigation Division. The Remington parkerized shotguns, with fourteen inch barrel, modified choke, Wilson Combat Ghost Ring rear sight and XS4 Contour Bead front sight, Knoxx Reduced Recoil Adjustable Stock, and Speedfeed ribbed black forend, are designated as the only shotguns authorized for IRS duty based on compatibility with IRS existing shotgun inventory, certified armorer and combat training and protocol, maintenance, and parts.

Submit quotes including 11% Firearms and Ammunition Excise Tax (FAET) and shipping to Washington DC

Moody’s warns US of credit rating fears

Moody’s warns US of credit rating fears
By Michael Mackenzie in New York and Gillian Tett in London

February 3 2010

Moody’s Investors Service fired off a warning on Wednesday that the triple A sovereign credit rating of the US would come under pressure unless economic growth was more robust than expected or tougher actions were taken to tackle the country’s budget deficit.

In a move that follows intensifying concern among investors over the US deficit, Moody’s said the country faced a trajectory of debt growth that was “clearly continuously upward”.

“Unless further measures are taken to reduce the budget deficit further or the economy rebounds more vigorously than expected, the federal financial picture as presented in the projections for the next decade will at some point put pressure on the triple A government bond rating,” the rating agency added in an issuer note.

This week, the White House forecast a $1,565bn budget deficit for 2010, which represents 10.6 per cent of gross domestic product and is the highest such ratio of debt to GDP since the second world war.