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Daily Digest 8/22 - Germany backs Draghi bond plan against Bundesbank, 11-Mile Stretch Of Mississippi Closed

Wednesday, August 22, 2012, 11:09 AM


Germany backs Draghi bond plan against Bundesbank

Germany’s director at the European Central Bank has thrown his weight behind mass purchases of Spanish and Italian debt to prevent the disintegration of the euro, marking a crucial turning point in the eurozone debt crisis.....He signalled full backing for the bond rescue plan of ECB chief Mario Draghi, brushing aside warnings from the German Bundesbank that large-scale purchases would amount to debt monetisation and a back-door fiscal rescue of insolvent states in breach of EU treaty law.

Overworked European Central Bank to add staff

IPSO President Marius Mager said that "the crisis mode has turned into the permanent one, that's the problem."

New Orleans is no longer the most blighted city in America, report finds

The new report estimated that 8,000 properties in New Orleans were repaired or rebuilt between September 2010 and March 2011, leaving around 21 percent of all properties blighted, compared with 27 percent in Flint and 24 percent in Detroit.

Rising costs of inmate meals strain budgets

Those updates have come with a higher price tag, since whole grains and produce cost more. And now the jail is dealing with increases in price due to fuel costs and is concerned about the expected impact of this year's drought, Sheriff Doug Cox said. This year, the jail needed an additional $50,000, a 23 percent increase, to the $222,000 budgeted for food.

Retail Gasoline in U.S. Rises to Record High for Season

Retail gasoline in the U.S. rose to a record for this time of year after refinery upsets cut fuel supplies and crude traded near a three-month high.

Spain boosts benefit for long-term unemployed

The special monthly payment -- a lifeline for many in a nation with one in four workers jobless -- kicks in only when regular unemployment benefits run out. Introduced by the last Socialist government, it had been due to expire on August 15. But at the last moment conservative Prime Minister Mariano Rajoy announced it would be extended.

Dutch Damned By Homeowner Debt (Ivo M.)

In the low-lying Netherlands, that's evocative enough. The problem is also bigger than the economy. Collective Dutch mortgage debt rose from 140 billion euros in 1995 to 640 billion euros ($790 billion) last year - or from 46 percent to 105 percent of GDP.

11-mile stretch of Mississippi River closed (safewrite)

Just north of downtown Memphis on Friday, the dredge Hurley was cutting a 2,000-foot swath of river bottom to ensure that the channel is safe for vessels. The dredge is referred to as a dustpan, which means it uses a vacuum-like suction to suck up sand from the river bottom, said its captain, Frank Segree.

In hard times, “I buy gold” is Italy’s boom business (westcoastjan)

Meanwhile, the toll of the crisis is being felt by traditional retailers. In central Rome, Massimo Della Rocca, 57, who has run the men’s’ clothes shop EDEL since inheriting it from his grandfather 30 years ago, is planning to close up.

How A Biofuel Dream Called Jatropha Came Crashing Down (Jason W.)

Ywe Jan Franken, an expert on biofuels for the FACT Foundation, a research group in the Netherlands, says this plant grows all over the tropics, including Indonesia, the Philippines, Cambodia, India and Latin America. (It originated in Central America, and Europeans spread it to their various colonies several centuries ago.)

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Middle class continues to shrink: study

"The American middle class continued to shrink last year while also falling behind in its share of the nation's wealth as more affluent citizens grab an ever larger piece of the economic pie, according to a report released Wednesday by the Pew Research Center. In 2011, the middle income tier -- those making $39,000 to $119,000 a year -- comprised just 51% of all adults, down from 61% in 1971. Over the same period, the upper tier rose to 20% of adults from 14% while the poor are now 29% as opposed to 25%. And, over the last 40 years, only the rich increased their share of the wealth, now taking in 46%, up from 29%, with the middle tier getting 45%, down from 62%. "The middle class has shrunk in size, fallen backward in income and wealth, and shed some -- but by no means all -- of its characteristic faith in the future," Pew said in announcing the results of its study. "

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Austerity's not working (UK)

Austerity's not working -- Yet again, government borrowing has exceeded expectations. So far this financial year, the deficit on current borrowing* has been £42.1bn compared to £30.9bn in the same period last year. This puts in doubt the OBR's forecast that this deficit would fall this year, from £98.9bn to £95.3bn. Duncan says this shows how austerity is self-defeating; a squeeze on spending weakens growth and thus reduces tax revenue. I'd add that this will remain the case for as long as the private sector deleverages. This is because of a simple, basic, unavoidable identity - that for every borrower there must be a lender. Government borrowing - by definition - means that other sectors are net savers. The problem is that there are only three other sectors, and all three have reasons to want to save or pay down debt:

  • - Households. Low consumer confidence means these are loath to borrow. And it might be the case that - with the debt-income ratio still high - they will continue to deleverage.
  • - Foreigners. The desire of Asian economies to save heavily is unlikely to cease soon. And the credit squeeze in the euro area is creating forced savers.
  • - Companies. Spare capacity, a dearth of investment opportunities and depressed confidence (partly thanks to the euro crisis) are all holding back investment, and encouraging firms to build up cash piles and pay off debt.

Now, as long as these three sectors want to save, the government will have to borrow, simply as an accounting identity.



Damnthematrix's picture
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So who's surprised.....  what does it take for people to stop believing in the free lunch?

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Getting Unemployment In Florida Is Frustrating Ordeal

The old trick of making it harder to get unemployment benefits, so you can say fewer people are getting benefits. And of course cutting unemployment insurance taxes on businesses even as the unemployment insurance fund continues to borrow money from the Federal government - a problem for the next state administration...

Getting An Unemployment Check In Florida Is Frustrating Ordeal For Many (August 21, 2012)
"Only one in three applicants for unemployment compensation in Florida receives any money, ranking the state dead last among the 50 states."


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Arthur Robey
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Europe is headed for a debt-based economy (slavery) with an unelected autocracy and a possible return to National Socialism, according to Nigel Farage of the UK Independent Party. 

Capital Account. RT.

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