Grand Theft Economics
Jim Christie
Reuters
Thu, 12 Nov 2009 17:15 EST
San Francisco - California's fiscal watchdog will soon release a report pointing to yet another massive state budget deficit sure to trigger weeks if not months of angst in the state capital of Sacramento.
Governor Arnold Schwarzenegger expects as much as he has repeatedly been snared in heated debates with and among lawmakers over how to balance the state's books. There also are fresh memories of marathon talks that ended in July with a deal to close a shortfall of more than $24 billion.
California's economy has not improved since then and this week Schwarzenegger began airing his own estimate of the budget gap he expects for the remainder of the current fiscal year. He pegs it at $5 billion to $7 billion -- before the $7.4 billion gap his finance advisors had previously forecast for the next fiscal year beginning in July.
Experts say California's combined deficit for the two years will top $15 billion and may swell well beyond that depending on how the state's revenues fare.
Carl Herman
The Examiner
Thu, 12 Nov 2009 08:28 EST
Gerald Celente is one of the world's best trend forecasters. In the following 4-part radio interview, Celente blasts current political and economic "leadership" as beholden to large corporate and financial interests.
As I've documented, professionals who work with economics are using unprecedented harsh language in attempt to get Americans' attention to the loss of trillions of our collective dollars. His comments include (paraphrased):
- "Too big to fail" banks are anathema to real capitalism.
- US economy is like a ruthless mafia ripping-off the American public. The US is being looted.
- US economy is no longer capitalism, it's oligarchies and fascism.
- We are witnessing the greatest heist in American history, and the banks are doing it.
- I don't like getting raped. I don't like my money going to Goldman Sachs."
- Do you have eyes to see and a mind to understand? These crimes are an affront to my intelligence.
- Bankers are money junkies lying to get their money fix. We have a criminal gang of money junkies dealing scams to get money from us. They never have enough. And for what? For gambling.
- This is no different from the French Revolution.
- The money junkies are in for a shock. The second American Revolution has begun.
- They are not my political leaders; they are political hacks. We are going back to royalty and serfs.
- This country doesn't have a clue what's going on, their minds have been deadened looking at presidential reality shows and bowing to political demagogues. What people have to do more than ever is think for themselves.
And reform is not on the way. Senator Bird's "reform" bill is nothing but empty rhetoric. My favorite economic analyst, Washington's Blog, gives
a great overview. One helpful context to consider is the
American economy is suffering from parasites.
Les Leopold
Huffington Post
Thu, 12 Nov 2009 15:50 EST
When I read the headline "
American Wages out of Balance" on page 2 of the
New York Times business section, I figured it would be a well-reasoned piece about our obscene distribution of income. It would be good for the
Times to describe how Wall Street profits and bonuses, derived from our bailout funds, will further exacerbate problematic wealth disparities.
No such luck. The Breakingviews.com column was all about how the American worker is overpaid! I kid you not. Edward Hadas, Martin Huchinson and Antony Currie inform us that:
American manufacturing workers should take average real wage cuts of as much as 20 percent to get into global balance.
They don't mention that the average non-supervisory worker has already taken an 18 percent cut in real wages between 1973 and 2007. What's worse, they claim that if workers don't take these additional cuts, these "overpaid" working stiffs will be the cause of another Great Depression, and I'm not overstating their claim. They write:
But if American wages get stuck above global market-clearing levels, as in the 1930s, the result could well be something approaching Depression-era levels of unemployment.
Shobhana Chandra and Bob Willis
Bloomberg
Fri, 13 Nov 2009 15:16 EST
Confidence among U.S. consumers unexpectedly dropped in November as the loss of jobs threatened to undermine the biggest part of the economy.
The Reuters/University of Michigan preliminary sentiment index decreased to a three-month low of 66 from 70.6 in October. A report from the Commerce Department showed the trade deficit widened in September by the most in a decade as rising demand for imported oil and automobiles swamped a fifth consecutive gain in exports.
Rising joblessness puts the economy at risk of slipping into a vicious circle of firings and declines in consumer spending that will limit the emerging recovery. The dollar's 12 percent decline since March and growing demand from Asia and Europe will probably spur exports further, giving factories a lift and making up for some of the weakness among households.
Reuters
Thu, 12 Nov 2009 14:00 EST
Rain from Tropical Storm Ida further slowed the cotton, soybean and sweet potato harvest in Mississippi, where crop losses were devastating even before the storm hit, a state agriculture official said on Thursday.
"We're seeing catastrophic losses," Andy Prosser, a spokesman for the Mississippi Department of Agriculture and Commerce, said in a phone interview.
Ida swept in from the Gulf of Mexico into neighboring Alabama on Tuesday. Mississippi was spared a direct hit but still got an unwelcome soaking.
"We got a few counties in east Mississippi that did get a lot of rain. Of course any more rain at this point is not good in terms of crop harvest," Prosser said.
At the start of the month, state economists estimated Mississippi's crop losses at $485 million. The southern U.S. state expected to lose two-thirds of its sweet potato crop, half its cotton and 44 percent of its soybeans.
Associated Press
Wed, 11 Nov 2009 10:36 EST
The dollar dropped to a new 15-month low as the the euro rose above $1.50 Wednesday morning, even as Treasury Secretary Timothy Geithner reiterated the administration's stance that a strong dollar is good for the U.S. economy.
Geithner, in a speech in Tokyo on his way to a summit of Asian finance ministers in Singapore, also said low interest rates and other government supports for the economy were still needed.
The expectation that the Federal Reserve will keep the key U.S. interest rate near zero has been weighing on the dollar. Higher interest rates make a currency more attractive for investors, since bets made in that currency can earn higher returns.
In morning trading in New York, the 16-nation euro rose to $1.5026 from $1.4978 late Tuesday. The British pound fell to $1.6665 from $1.6737, and the dollar edged up to 89.80 Japanese yen from 89.77 yen.
Shamim Adam
Bloomberg
Fri, 13 Nov 2009 09:40 EST
China is facing the biggest challenge to its currency policy since the start of the global recession as economists warn the peg to the dollar risks causing an asset bubble.
As recently as Nov. 9, People's Bank of China Governor Zhou Xiaochuan said he didn't feel much pressure to let the yuan rise, deflecting calls for an increase as exports start to recover and President Barack Obama prepares to discuss the issue in Beijing next week. China's stance risks adding to liquidity after credit surged by $1.3 trillion this year, according to Fred Hu at Goldman Sachs Group Inc.
China's sales of yuan to keep it fixed to the dollar contributed to a 29 percent jump in money supply, and the peg helped spur more than $150 billion in speculative funds from overseas in the past six months, China International Capital Corp. says. Record apartment prices and a 74 percent climb in the benchmark stock index this year are prompting warnings that the policy is inflating asset prices excessively.
Simone Meier
Bloomberg
Fri, 13 Nov 2009 09:38 EST
The euro-area economy emerged from its worst recession since World War II in the third quarter as exports from Germany and France helped compensate for households' reluctance to increase spending.
Gross domestic product in the economy of the 16 nations using the euro rose 0.4 percent from the second quarter, when it fell 0.2 percent, the European Union's statistics office in Luxembourg said today. Economists had forecast the economy to grow 0.5 percent, according to the median of 34 estimates in a Bloomberg survey.
Europe's economy is gathering strength after governments stepped up stimulus measures and the European Central Bank injected billions of euros into markets to encourage lending. While confidence in the economic outlook is at a 13-month high, rising unemployment, the expiration of stimulus plans and a surging euro are threatening to undermine a recovery.
Oliver Biggadike and Matthew Brown
Bloomberg
Fri, 13 Nov 2009 09:27 EST
Brazil, South Korea and Russia are losing the battle among developing nations to reduce gains in their currencies and keep exports competitive as the demand for their financial assets, driven by the slumping dollar, is proving more than central banks can handle.
South Korea Deputy Finance Minister Shin Je Yoon said yesterday the country will leave the level of its currency to market forces after adding about $63 billion to its foreign exchange reserves this year to slow the appreciation of the won. Chile Finance Minister Andres Velasco said the same day that lawmakers approved an increase in local debt sales to finance spending, a move that will allow the government to keep more of its dollar-based savings overseas and slow the peso's rally.
Governments are amassing record foreign-exchange reserves as they direct central banks to buy dollars in an attempt to stem the greenback's slide and keep their currencies from appreciating too fast and making their exports too expensive. Half of the 10-best performers in the currency market this year came from developing markets, gaining at least 14 percent on average, according to data compiled by Bloomberg.
Judy Shelton
The Wall Street Journal
Wed, 11 Nov 2009 19:38 EST
© Chad Crowe
In the Woody Allen film
Annie Hall, the main character tries to explain irrational relationships by recounting an old joke. "This guy goes to a psychiatrist and says, 'My brother's crazy, he thinks he's a chicken.' The doctor says, 'Well, why don't you turn him in?' And the guy says, 'I would, but I need the eggs.'"
It takes similar reasoning to reconcile the elation felt across America every time the stock market rises - partially replenishing personal investment portfolios and 401(k) retirement plans - with the uneasy feeling that we are being set up for yet another big financial disappointment. We dare to hope that the economy is growing solidly once more, that the Federal Reserve has superior knowledge about providing liquidity, and that the U.S. Treasury knows what it's doing by guaranteeing money market-fund assets.
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