Daily Digest

Daily Digest 4/10 - Tightening The Screws, Disappointing Jobs Report Sends Shares Lower, Raising The Floor On Pay

Tuesday, April 10, 2012, 10:45 AM
  • Obama To Make Case For "Buffett Rule"
  • Tightening The Screws
  • Why A Triple-Crisis Is On The Near Horizon
  • Weak Jobs Report Sends Shares Lower for 4th Day
  • Seeking Robots To Go Where First Responders Can't
  • Raising The Floor On Pay
  • Surplus in China Trade Comes as Surprise

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Economy

Obama To Make Case For "Buffett Rule" (jdargis)

“The idea behind the Buffett Rule is to have a tax on high-income earners who avoid paying much of their income taxes,” said Alan B. Krueger, chairman of Mr. Obama’s Council of Economic Advisers. “So in that sense, it’s not a new tax – it’s bringing the high-income earners who managed to avoid paying a large share of their income in taxes up to the level of other high-income earners.”

Tightening The Screws (Ilene)

“The public is still buying bonds like mad and the markets are getting renewed help from the foreign central banks and the commercial banks in the last 2 weeks. That could underpin a return to a bullish tone for stocks once the big Treasury auctions are out of the way on Thursday. All in all, the pattern looks weak for stocks and strong for bonds early in the week, with Thursday afternoon shaping up as an opportune time for reversal."

Why A Triple-Crisis Is On The Near Horizon (David B.)

You know that even some of the stronger EU countries, France and Germany included, are also embroiled in the crisis — their banks swimming in toxic sovereign debts … their own budgets strained by the ever-greater demands for bailout funds … their people rebelling against the entire concept of a European Union … and more.

Weak Jobs Report Sends Shares Lower for 4th Day (jdargis)

John Manley, chief equity strategist at Wells Fargo Advantage Funds, said financial shares were hurt by lingering concerns about credit quality after the Spanish debt auction set off declines in European indexes last week. “My guess is people are rethinking Europe,” he said. “Concerns about credit quality — those are the issues that were never really addressed.”

Seeking Robots To Go Where First Responders Can't (jdargis)

In the Tuesday announcement, the Defense Advanced Research and Planning Agency, or Darpa, lists eight likely tasks the robot will need to perform — among them driving a vehicle to a simulated disaster site, moving across rubble, removing rubble from an entryway, climbing a ladder, using a tool to break through a concrete wall, finding and closing a valve on a leaking pipe, and replacing a component like a cooling pump.

Mr. Edsinger said the challenge would be not in completing any one of the tasks but rather in integrating them into a single mission. “I feel we have already have systems that can achieve each individual task in the challenge,” he said.

Raising The Floor On Pay (jdargis)

Massachusetts lawmakers are pushing for a big jump, with the Legislature’s joint committee on labor approving a measure last month that would raise the minimum to $10 an hour, which would leapfrog Washington State, whose $9.04 minimum is the nation’s highest.

Surplus in China Trade Comes as Surprise (jdargis)

Slowing domestic demand is a concern in an economy, except when deliberately engineered to slow inflation, as is the case to some extent in China. But the Chinese government faces a particularly difficult balancing act, as strong economic growth has been its main claim to political legitimacy.

Article suggestions for the Daily Digest can be sent to dd@PeakProsperity.com. All suggestions are filtered by the Daily Digest team and preference is given to those that are in alignment with the message of the Crash Course and the "3 Es."

4 Comments

saxplayer00o1's picture
saxplayer00o1
Status: Diamond Member (Offline)
Joined: Jul 30 2009
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pinecarr's picture
pinecarr
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Posts: 1543
'Shadow Banks on Trial as China’s Rich Sister Faces Death"

Interesting article on the Chinese Shadow Banking System, and how one woman involved has been singled out for punishment. 

http://www.bloomberg.com/news/2012-04-10/shadow-banks-on-trial-as-china-s-rich-sister-faces-death.html

Here's an excerpt':

Operating outside the banking system or government regulation, the informal networks provide an important source of economic growth, capital for private companies and return for investors seeking to beat inflation. Premier Wen Jiabao, in an unusual move, weighed in on the case at a March 14 news conference. His comments highlighted a public debate over the importance of shadow banking to the Chinese economy, government efforts to bring it under control -- and whether capital punishment is an effective means to do so.

“Chinese companies, especially small ones, need access to funds,” Wen said when asked about Wu’s case. “Banks have yet to be able to meet those companies’ needs, and there is a massive amount of idle private capital. We need to bring private finance out into the open.”

Unfairly Singled Out

Wu’s lawyer says his client, now 30, was unfairly singled out and is no different from the estimated 42 million Chinese business owners who rely on the shadow-banking system for financing when they cannot get loans from state-owned banks. The Supreme People’s Court is reviewing the 2009 verdict and will decide as early as this month whether Wu Ying lives or dies.

“Entrepreneurs are paying attention to it because today’s Wu Ying could be any of them tomorrow,” the lawyer, Yang Zhaodong, said in an interview in Beijing last month. “There are so many of them doing the same thing Wu Ying did. This case not only relates to Wu’s life, but to whether China’s legal and judicial system is fair.”

Shadow banking has been fueled by a two-year credit squeeze in China and by large, state-owned banks’ preference for lending to government-run companies rather than small businesses. Private entrepreneurs account for 60 percent of China’s total economic activity and provide jobs for 80 percent of its urban population, according to China’s National Development and Reform Commission.

“Underground banking filled the hole left by China’s state-owned banks, which have this long-term bias toward big enterprises,” said IHS’s Ren. “Even though it is an extremely opaque market and has a lot of hidden problems, the government needs it to meet the basic financing needs of small businesses.”

Arthur Robey's picture
Arthur Robey
Status: Diamond Member (Offline)
Joined: Feb 4 2010
Posts: 2084
The Spat goes Viral.

Here is a predigested account of the spat between Krugman and Prof Steve Keen by an economist. Even I could understand.

I may be wrong, but it looks like a tipping point. A host of concerned economy-watchers are beginning to understand that most economists failed to understand or predict the global economic crisis, and should therefore be deposed. Just as the despots of north Africa and the middle East crumbled in the face of a critical mass of popular opposition, so too mainstream economics is looking shaky in the fresh-faced glare of laymen.

From The Renegage Economist.

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