Daily Digest

Daily Digest - January 29

Friday, January 29, 2010, 10:20 AM
  • Davos - Greece Says Being Targeted As Euro Zone "Weak Link"
  • Funds Flee Greece as Germany Warns Of “Fatal” Eurozone Crisis
  • The Fed's Anti-Inflation Exit Strategy Will Fail
  • Senate Approves Amendment to Raise Debt Ceiling by $1.9 Trillion
  • Additional Perspectives on the AIG Fiasco
  • Course Creator's Socioeconomic Ideas Gain Momentum
  • The Decline: The Geography of a Recession
  • Financing Solar Power: A Lighter Burden

Economy

Davos - Greece Says Being Targeted As Euro Zone "Weak Link" (Nickbert)

Greek Prime Minister George Papandreou said on Thursday his country was being targeted as a "weak link" in the euro zone but had no plans to pull out of a bloc it said would help restore stability.

Funds Flee Greece as Germany Warns Of “Fatal” Eurozone Crisis (pinecarr)

Germany has triggered a near-panic flight from southern European debt markets by warning that there will be no EU bail-outs, even though it fears the region's economic crisis has turned dangerous and could prove "fatal" for the entire eurozone.

The Fed's Anti-Inflation Exit Strategy Will Fail (Nickbert)

The exit strategy is incomplete. Proponents are guilty of practicing economics without prices. They never say what the interest rate on reserves must be to get banks to hold the approximately $1 trillion of reserves above the minimum they're legally required to hold. That's the critical question.

Senate Approves Amendment to Raise Debt Ceiling by $1.9 Trillion (Nickbert)

The Senate approved legislation Thursday increasing the federal government's borrowing limit by $1.9 trillion, enough to enable the Treasury to pay its bills through 2010.

Once the increase is signed into law, the federal government will be able to borrow up to $14.3 trillion, by far the highest amount of debt it has ever held on its books. The current limit of around $12.4 trillion would have been breached by the end of February.

Additional Perspectives on the AIG Fiasco (pinecarr)

While Tim Geithner may hope the AIG situation is now dead and buried, it is likely anything but, with the recently launched investigation into disclosure fraud by the SIGTARP, and the relentless efforts by Darrell Issa to metaphorically crucify the tax-challenged treasury secretary currently ongoing.

Course Creator's Socioeconomic Ideas Gain Momentum (pinecarr)

A short article on Chris' talks in California.

"I believe this next stage is about people taking responsibility for the future," Martenson said. "What I really care about is sparking discussion, sparking ideas. It is absolutely vital that everybody at least hears the information."

The Decline: The Geography of a Recession (Amanda)

Watch the deteriorating transformation of the U.S. economy from January 2007 - approximately one year before the start of the recession - to the most recent unemployment data available today.

Energy

Financing Solar Power: A Lighter Burden (jeaninedargis)

The city of Berkeley, California ... has just completed a pilot programme in which it lends homeowners the money to put panels on their houses. The owners repay the loans over a period of years through an extra charge on their local property-tax bills.

Please send article submissions to: [email protected]

15 Comments

Johnny Oxygen's picture
Johnny Oxygen
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Beware, the Foreclosure Collection Man Cometh

Beware, the Foreclosure Collection Man Cometh

http://globaleconomicanalysis.blogspot.com/2010/01/beware-foreclosure-collection-man.html

When John King stopped making payments on his home in Coral Gables, Florida, two years ago, he assumed the foreclosure ended his mortgage contract, he said. Last month, a Miami-Dade County court gave collectors permission to pursue him for $44,000 stemming from the default.

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saxplayer00o1
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Re: Daily Digest - January 29

"Jan. 28 (Bloomberg) -- U.S. universities boosted their long-term debt by 54 percent in the year ended June 30, as the economic crisis forced them to borrow to offset record losses in their endowments.

Universities, on average, had $167.8 million in debt in the 12 months ended June 30..."

"The current levels of budget deficits in both Europe and the U.S. are not sustainable and Europe's economic recovery will only be modest, European Central Bank President Jean-Claude Trichet told CNBC Thursday.

"We all have a very, very big challenge... The levels of public finance deficit are non-sustainable on both sides of the Atlantic, that's absolutely clear," Trichet said."

"Jan. 29 (Bloomberg) -- American International Group Inc., the insurer bailed out by the U.S., increased its borrowing under a Federal Reserve credit line by the most since October to repay debt from an expiring government commercial paper program.

AIG owes $25.8 billion on the line, about $2.4 billion more than last week, according to Fed data released yesterday. The draw has increased for six straight weeks."

"As Phoenix struggles with an unprecedented budget crisis, officials say police officers and firefighters will be laid off for the first time in city history.

The announcement came Thursday afternoon as the Phoenix city manager informed city departments how much funding they would lose this year.

The police and fire chiefs detailed the massive cuts their departments will take: $54 million for police and $35 million for fire.

Both departments have faced budget reductions throughout the economic downturn. Now officials said there is no where else to cut but let staff go.

Nothing will be finalized for at least two weeks.

But early estimates are that 350 sworn police officers will be fired and 144 firefighters let go"

Date 2009-12-02 2009-12-16 2009-12-30 2010-01-13 2010-01-27
Value 2081.192 2035.921 1995.665 1971.423 2059.992
Johnny Oxygen's picture
Johnny Oxygen
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Re: Daily Digest - January 29

hehe..look how well it all works. Look at the CNBC headlines. As planned PM's are dropping. People are very easily manipulated.

Consumer Mood at 2-Year High Despite Financial, Job Worries

 

Economy Grows 5.7 Percent; Chicago PMI Jumps

 

Gold Slips Toward $1,080 as Dollar Holds Firm

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Ruhh
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Re: Daily Digest - January 29

Laser fusion test results raise energy hopes
http://news.bbc.co.uk/2/hi/science/nature/8485669.stm

 

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opusnz
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Re: Daily Digest - January 29

I recently discovered Jim Sinclairs mineset.   Please read his formula.  Things seem to playing out as described.  I can't believe this was written in 2006!

http://jsmineset.com/jims-formula/

Cheers, Paul

 

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Re: Daily Digest - January 29

Keynes & Hayek rap -- definitely worth a watch :)

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Damnthematrix
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What the...?

US economic growth fastest in six years

http://www.abc.net.au/news/stories/2010/01/30/2805524.htm?section=justin

The robust performance closed out a year in which the economy contracted 2.4 per cent, the biggest fall since 1946. (AFP: Timothy A Clary, file photo)

The US economy grew at its fastest pace in more than six years in the fourth quarter, surprising economists, as businesses curbed their aggressive efforts to cut stocks and stepped up spending.

In its first estimate, the Commerce Department said that gross domestic product expanded at a 5.7 per cent annual rate.

The robust performance closed out a year in which the economy contracted 2.4 per cent, the biggest fall since 1946.

After dropping off a cliff at the start of the year, US GDP turned higher in the third quarter. The quickening fourth quarter pace was driven by firms not cutting inventories as deeply as before, rather than a surge in domestic demand.

But it pointed to a sustainable recovery at a crucial time before government stimulus plans run out.

"The data shows that the necessary transition from government stimulus to private sector spending is underway, which is essential to sustain the economic expansion," said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh.

US stocks initially rallied on the eye-catching growth number. They were flat by early afternoon as worries about fiscal troubles buffeting Europe offset the GDP report. Prices for government bonds fell and the dollar rose.

Getting the economy on a sustainable growth track remains one of the key challenges facing US President Barack Obama, who earlier this week outlined a raft of measures to create jobs and nurture the recovery.

The brightening economic picture was further enhanced by a jump in business activity in January to its high level in four years while consumer confidence perked up.

Economists said they expected the lift from inventories to fade over time, with economic growth moderating in the second half of the year.

"The economy's engine is running, but to some degree we're still in a ditch spinning our wheels. With fiscal and monetary fuel running out, we need job growth to get us firmly on the road to recovery," said Bill Cheney, chief economist at John Hancock Financial in Boston.

- Reuters

Johnny Oxygen's picture
Johnny Oxygen
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Re: What the...?

It makes you wonder how big and obvious does the lie have to be before everyone goes WTF?

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idoctor
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Re: Daily Digest - January 29

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MarkM
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Re: Daily Digest - January 29

http://globaleconomicanalysis.blogspot.com/2010/01/gdp-mirage-last-hurrah.html

Mish

"GDP is a mirage of sand blowing in the wind. So is global growth. It is a mistake to believe government spending can possibly provide a solid foundation for a lasting recovery."

It really is lie upon lie.  Sad and sobering.

idoctor's picture
idoctor
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Re: Daily Digest - January 29

The US economy grew at its fastest pace in more than six years in the fourth quarter, surprising economists, as businesses curbed their aggressive efforts to cut stocks and stepped up spending.

In its first estimate, the Commerce Department said that gross domestic product expanded at a 5.7 per cent annual rate.

I can see it everywhere......won't be long & all the buildings in the below videos will be full again LOL..... Yes Johnny O. I have to agree WTF??

How Obama's $33 Billion Hiring Tax Credit Would Work

http://www.cnbc.com/id/35151113

Hum....I wonder how this brain child will work any better than the cash fo clunkers did...costing the tax payer $24,000 per each working car destroyed(how American??). 

 Following are key details of the proposal:

  • Employers would receive a payroll tax credit of up to $5,000 for every net new employee they hire in 2010.

    The credit would be administered off of increases in an employer's unemployment insurance wage base associated with new hiring and would be equal to 72 percent of the wage base increase up to $5,000 for each new worker.

    Thus an employer could get the whole $5,000 credit even if the additional worker only earns $7,000 a year — a level that clearly implies part-time work.

  • The proposal also allows businesses to claim tax credits for pay raises. They will receive a bonus 6.2 percent tax credits on aggregate wage increases in excess of inflation, helping to offset the added costs for the Social Security payroll taxes they would pay on those higher wage rates.

    The bonus would be calculated off the Social Security payroll tax base, so firms would not get credit for increasing wages for employees making more than the maximum taxable wage of $106,800.

    For example, a firm with 50 employees that provides each worker with a $1,000 real wage increase in 2010 would get a $3,100 tax credit.

 The total benefit from these credits will be capped at $500,000 per firm, to ensure that the majority of the benefit goes to small businesses. Nonprofit entities will be eligible for the credit, while new start-up firms can receive up to a $2,500 credit per new hire.

 Firms will be able to claim the credit on a quarterly basis instead of only once a year as in previous programs in the 1970s, which will aid in corporate profit and cash-flow statements.

  • The proposal has anti-abuse provisions to prevent employers from "gaming" the system. Businesses that later reduce employment or payrolls in 2010 would be ineligible for both the $5,000 credit and the wage bonus.

    It would deter the replacement of full-time workers with more part-time workers by limiting a firm's maximum jobs credit amount to 25 percent of the increase in a firm's Social Security wage base.

 

The program does not have a stated cap but is estimated to cost about $33 billion, according to a White House fact sheet. A good chunk of that cost would have to come from credits for real wage increases.

If it were all to be spent on new hires, it would be impossible to consume the full amount in a year.

At $5,000 per new hire, the whole $33 billion would translate to about 6.6 million jobs — a level of job growth virtually impossible in the current economic environment. Adding that many jobs in a year would require the economy to add some 550,000 jobs a month. Even in the boom year of 2005, peak monthly job growth was in the 300,000 range.

Now this seems simple enough right LOL...sure it will go off without a glitch?? My question is why not make it simple & just cut taxes across the board without all the games. Where is Robocob when we need him LOL?

idoctor's picture
idoctor
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Re: Daily Digest - January 29

dcm's picture
dcm
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Re: Daily Digest - January 29

the more I understand my government's policies the more I think the first two words of WTF stand for "who to"

Damnthematrix's picture
Damnthematrix
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Re: Daily Digest - January 29

http://www.guardian.co.uk/business/2010/jan/28/uk-banks-credit-downgrade

UK banks downgraded by credit rating agency

28 Jan 2010

Standard & Poor's said reliance on state support contributed to its move to downgrade the banking industry's rating

Britain's banking industry was downgraded by the international credit rating agency, Standard & Poor's, as a result of the country's "weak economic environment" and the banks' "high" dependence on state support.

In its second major intervention in Britain in the past year, the agency announced that it was demoting Britain's banking industry by one tier to its Group 3 out of 10. Banks in Canada, France and Germany are in the first and second groups.

The agency, which placed Britain on "negative watch" last May, said it had acted in light of Britain's "weak economic environment, the reputational damage we believe has been experienced by the banking industry, and what we see as the high dependence on state-support programs of a significant proportion of the industry". The government has a majority stake in two banks – RBS and Northern Rock.

Nigel Greenwood, S&P's credit analyst, said: "In our opinion, the weak UK economy will continue to hinder the credit profile of the UK banking industry. This reflects the sharp decline in economic output and our expectation that the unwinding of the high level of debt – of the government, households, and certain industrial segments – will weigh heavily on relative economic growth prospects and banks' financial performance.

"In our opinion, the near collapse of a number of financial institutions damaged the reputation of the UK banking system. This led to wide-ranging state support, including significant government stakes in two of the four major banking groups. We note that there is a wide dispersion in credit quality among UK banks and that some banks did not require direct government support."

The intervention by S&P comes less than a year after it announced that Britain could lose its AAA credit rating. In May last year the agency said there was a "one in three" chance that Britain's rating on its sovereign debt might be cut. A lower credit rating pushes up the cost of borrowing.

Mark Hoban, the shadow Treasury minister, said: "This is disappointing but demonstrates the need for reforms to the banking sector so that we don't repeat the mistakes of the last decade. The plans set our in our white paper, From Crisis to Confidence: A Plan for Sound Banking, should help restore the reputation of the UK banking sector."

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lotsofquestions
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Re: Daily Digest - January 29

Thanks for posting the link.  :)

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