Monday, October 31, 2011

Why the latest eurozone bail-out is destined to fail within weeks

Why the latest eurozone bail-out is destined to fail within weeks

I want last week's European bail-out to work. My sincere hope is that collective and decisive action by the eurozone's large member states will stabilize global markets, at least for a while, so allowing the global economy to catch its breath.

Friday, October 21, 2011

S&P sees downgrade blitz in EMU recession, threatening crisis strategy

S&P sees downgrade blitz in EMU recession, threatening crisis strategy
By Ambrose Evans-Pritchard

Standard & Poor's (S&P) is to warn that a double-dip recession in Europe would imperil France's AAA rating and set off a string of downgrades across Southern Europe, undermining the EU's debt crisis strategy.

The EU-IMF bail-out machinery would require an extra €250bn or more to stabilize eurozone debt markets, forcing Germany and EU's creditor states to vastly increase rescue commitments.

The report, due Friday, said a double-dip recession would lead to a downgrade of "one or two notches" for France, Spain, Italy, Ireland and Portugal, both because of tumbling tax revenues and the extra costs of propping up banks.

The scenario looks increasingly likely after Germany slashed its growth forecast from 1.8pc to 1pc for 2012. Greece and Portugal are contracting at alarming speeds. Italy and Spain are already in industrial recession.

Thursday, October 20, 2011

Washington Policy Wonks need to look no further than recent History of 1990 Japan for answers.

Washington Policy Wonks need to look no further than recent History of 1990 Japan for answers. 
one small voice

Policy experts continue to be stymied by their inability to get the economy moving again .A look at recent history would suggest that both the talking heads and Washington policy wonks should know better and be better served if they took a look at the failings of Japan in the 1990's.

In the not too distant past Japan was faced with many of the same issues caused by collapsing property and stock markets,leaving Japanese banks upside down on much of the nations collateral. Japan's once invincible economy ran aground with similar policy missteps that our current policy makers are making .

First Japan embarked on printing money and zero interest rates to accelerate demand ,but this is like pushing on a string. It failed in the 1990's for Japan and in reality did nothing to effect the supply and demand curve. This priming the pump or inflating your way to prosperity has historically proven to have dangerous consequences such as run away inflation and in the worst case could lead to a currency collapse.

At the same time both Japan in the 90's and the US government today have engaged in a massive buildup of regulation for both personal and business behavior with the net effect being to suffocate business initiative.

Both countries engaged in wrong headed Government "Stimulus" plans that never work , I repeat NEVER. Most of the stimulus money is wasted or lands in the hands of public unions with little or no job creation. Again Japan in the 1990's embarked on the same foolishness with a huge capital investment plan for infrastructure .Like the fool hearty promotion of alternative energy in the US today where at the end of the day much of the money was wasted ,taxes have to be raised to cover the debt which further suppresses economic growth.

Japanese banks simple hid there loses and in many cases have yet to recognize the depreciated collateral.The US has similar issues with the destruction of the credit markets, the 2000 stealth stock market crash and the inability for the government to offer any reliable economic statistics. There is a consistent theme of not facing the reality of the current economic situation.

Finally for both countries their constant central and state government tweaking or interference with the economy and its unintended consequences  have created so much uncertainty that they have virtually stifled business decision making.

The current period of economic decline will not end until more substantive pro-growth policy's are enacted ,such as deregulation, shrinking the size and scope of government ,paying down debt and lowering taxes. It is just that simple.

Tuesday, October 18, 2011

View: China’s Currency Distracts From U.S.’s Policy Failings

View: China’s Currency Distracts From U.S.’s Policy Failings

Republican presidential candidate Mitt Romney says that on “Day One” in office he would declare China a currency manipulator. So it’s safe to assume that were he president, he would sign the bill that passed the Democratic- controlled Senate last week to impose sanctions on China if it doesn’t free the yuan to appreciate against the dollar.

House Speaker John Boehner has said he will try to prevent a vote on the currency measure. We hope he succeeds. It’s unfortunate that the temptation to blame other countries for America’s self-inflicted woes is gaining bipartisan support.

Let’s be clear: We don’t favor China’s policy of keeping the yuan artificially weak, and thus making its exports cheaper. But blaming the U.S.’s sluggish economy on China’s currency policy is a diversion from more fundamental problems: the inability of political leaders to revive the economy in the short term (by helping homeowners with “underwater” mortgages, by investing in infrastructure and by providing tax incentives for employers to increase hiring), and in the long term with a budget-balancing plan.

Thursday, October 13, 2011

Doctor Doom :Economist Nouriel Roubini's Firm Is For Sale

Doctor Doom :Economist Nouriel Roubini's Firm Is For Sale
Published: Tuesday, 11 Oct 2011 | 12:26 PM ET
By: David Faber
CNBC Anchor and Reporte

Roubini Global Economics, the economics research firm begun by noted economist Nouriel Roubini, is for sale, according to sources who have been approached by an investment bank conducting an auction for the firm.

RGE, as it's known, has grown quickly since its founding by Roubini, who is its chairman. It has over 85 employees, and is still losing money.

According to people who have seen the offering book for the sale, the firm is projected to have revenues of $14 million this year and it will post a loss of roughly $2 million dollars, and projects eight percent revenue growth into next year followed by 40 percent revenue .

Monday, October 10, 2011

‘Time short’ for eurozone, says Cameron

‘Time short’ for eurozone, says Cameron
By George Parker and Lionel Barber

David Cameron has urged European leaders to take a “big bazooka” approach to resolving the eurozone crisis, warning they have just a matter of weeks to avert economic disaster.

The UK prime minister wants France and Germany to bury their differences and to adopt before the end of the year what he claims would be a decisive five-point plan to end the uncertainty, which was having a “chilling effect” on the world economy.

Meanwhile, on Sunday, Angela Merkel, the German chancellor, and France’s President Nicolas Sarkozy spelt out their determination to defend the stability of the euro as they met for a bilateral summit in Berlin, though they refused to spell out details of their plans.

Friday, October 07, 2011

Soros fails to quash insider trading conviction

Soros fails to quash insider trading conviction
By Sam Jones in London and Stanley Pignal in Brussels

George Soros, the billionaire hedge fund manager, has lost a case at the European Court of Human Rights to have his criminal conviction for insider dealing quashed.

The failed appeal in a 4-3 decision by the Strasbourg-based court is the latest twist in a nine-year battle by the 81-year-old Mr Soros to clear his name following his conviction in France in 2002.

The French criminal case hinged on trades that the Hungary-born investor had executed 14 years earlier in the stock of Société Générale that reaped his hedge fund, the Quantum Fund, $2.9m in profits.

Mr Soros was found by the court in 2002 to have had inside knowledge about the intentions of a group of super-wealthy French investors – the “golden granddads” – to bid for the bank.

World facing worst financial crisis in history, Bank of England Governor says

World facing worst financial crisis in history, Bank of England Governor says
By James Kirkup10:00PM BST 06 Oct 2011

The world is facing the worst financial crisis since at least the 1930s “if not ever”, the Governor of the Bank of England said last night.

Sir Mervyn King was speaking after the decision by the Bank’s Monetary Policy Committee to put £75billion of newly created money into the economy in a desperate effort to stave off a new credit crisis and a UK recession.

Economists said the Bank’s decision to resume its quantitative easing [QE], or asset purchase programme, showed it was increasingly fearful for the economy, and predicted more such moves ahead.

Wednesday, October 05, 2011

China warns of trade war if U.S. bill passes

China warns of trade war if U.S. bill passes

* Beijing accuses U.S. senate of "politicising" trade issues

* Warns of trade war, says bill would violate WTO rules

* Forcing the yuan higher would damage world recovery

* Says bill will not address underlying economic problems (Adds analyst quote, Xinhua commentary, links)

By David Stanway and Aileen Wang

BEIJING, Oct 4 (Reuters) - An angry China warned Washington on Tuesday that passage of a bill aimed at forcing Beijing to let its currency rise could lead to a trade war between the world's top two economies.

Tuesday, October 04, 2011

Greece Falls Into 'Death Spiral': Rising Debt, No Growth

Greece Falls Into 'Death Spiral': Rising Debt, No Growth
Published: Monday, 3 Oct 2011
By: Reuters

Drowning in red ink, Greece has nowhere to turn to revive the economic growth that might put its debt on a sustainable trajectory, reassure angry foreign creditors and offer hope to its recession-weary citizens

Instead, the country finds itself in a vicious circle—a death spiral, some would say—in which it is borrowing ever more to keep up on its existing debts, crushing growth in the process and thereby worsening its all-important ratio of debt-to-gross domestic product.

Monday, October 03, 2011

Germany 'won't give more to EU bail-out fund'

Germany 'won't give more to EU bail-out fund'

AFP - German Finance Minister Wolfgang Schaeuble ruled out Germany contributing any more money to the beefed-up EU bail-out fund than the 211 billion euros approved by parliament, in an interview published Saturday.

"The European Financial Stability Facility has a ceiling of 440 billion euros ($590 billion), 211 billion of which is down to Germany. And that is it. Finished," he told the magazine Super-Illu.

He also suggested the European Stability Mechanism, which is due to replace the EFSF by 2013 at the latest, would be smaller.