News Posts

Next Budget Showdown Is Just 6 Weeks Away

by

The deal between Democrats and Republicans to raise the government’s debt limit did not end the warfare over the federal budget. It was merely a temporary ceasefire. The conventional wisdom in Washington (especially inside the administration) holds that the next skirmish will come around Thanksgiving, when the so-called Super Congress of six Republicans and six Democrats have a deadline to make their recommendations about reducing the expected 10-year deficit by another $1.5 trillion. But the next budget confrontation in Washington could come much sooner. We could be just six weeks away from another threat to shut down the federal government. … Read more

Debt Crisis Could Be Turning Point for US-China

by

When President Nixon went on his historic visit to China in 1972, he probably wouldn’t have predicted that within four decades the country then struggling to emerge from decades of disastrous economic policies would be issuing tart statements urging the U.S. to adopt a more responsible fiscal policy, as its biggest creditor. Or, indeed, that it would have become second only to the U.S. in the sheer size of its economy, with some predicting that it could take over as the world’s largest economy within a decade, as its gross domestic product (GDP) growth—close to 10 percent per year—continues to close the … Read more

Low Rates May Do Little to Entice Nervous Consumers

by

The Federal Reserve’s announcement last week that it intended to keep credit cheap for at least two more years was a clear invitation to Americans: Go out and borrow. But many economists say it will take more than low interest rates to persuade consumers, a crucial driver of the nation’s economy, to take on more debt. There are already signs that the recent stock market upheaval, turbulence in Europe and gridlock in Washington over the federal deficit have spooked consumers. On Friday, preliminary data showed that the Thomson Reuters/University of Michigan consumer sentiment index had fallen this month to lower than it was in … Read more

Euro zone bond debate raises pressure on Merkel

by

(Reuters) – One of Germany’s leading economic associations came out in favor of joint euro zonebond issuance on Monday, raising pressure on Chancellor Angela Merkel to consider bolder crisis steps ahead of a meeting with the French president. Until now, the idea of so-called “Eurobonds” has been fiercely opposed by Berlin, which is fearful such a step would push up German borrowing costs and reduce incentives for weaker euro zone members like Greeceto reform their economies. A German government spokesman was emphatic — Merkel and France’s Nicolas Sarkozy will not discuss common euro zone issuance in Paris on Tuesday because Berlin does … Read more

US stocks rise after unemployment report

by

NEW YORK (AP) — Stocks are rising after news that fewer people joined the unemployment line last week and word that a technology bellwether’s profit beat expectations. The Dow Jones industrial average is up 256 points, or 2.4 percent, at 10,972 at 11:45 a.m. in New York. The S&P 500 is up 30, or 2.8 percent, at 1,151. The Nasdaq is up 73, or 3.1 percent, at 2,454. For the first time in four months, the number of people filing for unemployment benefits for the first time fell below 400,000 last week. Analysts say it may be a sign that … Read more

Are Computers Bringing Down The Stock Market?

by

Any time something bad happens, we’re always looking for a reason why. Some would say that we’re always looking for someone or something to blame but our motives may simply be to make sense of a situation that feels like it’s spiraling out of control. The world’s financial markets have definitely felt that way as of late.   There’s plenty of blame to go around. Some people blame the Obama Administration while others like CNBC’s Jim Cramer say that the European banks are in the midst of their own 2008 and that is causing financial contagion worldwide. The blame doesn’t … Read more

Obama Under Pressure

by

Stock market turbulence demands serious action on US deficit The Global market turbulence may force Washington’s politicians back into session to find real solutions to the Nation’s skyrocketing debt and deficit, according to an economics expert. C. Fred Bergsten, director of the Peterson Institute for International Economics, said the debt-ceiling legislation Congress passed last month was just a set of procedures aimed at reducing the deficit over time but did not actually take effect by itself. “That is not good enough,” Mr. Bergsten in an interview Tuesday. “The markets are responding in part to the failure of the legislation to … Read more

Central Bankers Race to Protect Growth in 72 Hours of Crisis

by

Aug. 11 (Bloomberg) — Central bankers are racing to shield their economies from fiscal tightening and lopsided currency swings that threaten a new global recession. In the 72 hours after a Group of Seven conference call on Aug. 7, the Federal Reserve pledged to keep interest rates near zero through at least mid-2013, the European Central Bank intervened in bond markets and the Bank of England indicated it’s ready to add more stimulus if needed. Japan signaled renewed concern about the yen and Switzerland yesterday stepped up its fight to curb an “overvalued” franc. “Central bankers have so far been … Read more

Fed Said to Follow Basel Capital Rules for Biggest U.S. Banks

by

Aug. 10 (Bloomberg) — Federal Reserve officials are drafting rules for the biggest U.S. banks that won’t be more stringent than international capital standards agreed to in Basel, Switzerland, according to a person familiar with the discussions. Federal Reserve Governor Daniel Tarullo cited a “goal of congruence” between the Basel standards and the Fed’s work on rules under the Dodd-Frank Act, which overhauls banking regulation, in a June 3 speech. The central bank hasn’t veered from that, according to the person, who declined to be identified because the rules are still being drafted. The Basel Committee on Banking Supervision, which … Read more

France Seeks New Deficit Battle Plan

by

PARIS—The French government pledged Wednesday to consider fresh tax rises, spending cuts and other budget measures to ensure the country doesn’t deviate from a challenging deficit-reduction trajectory as market concerns that France’s top-notch creditworthiness is at risk accelerated. French bank shares were hammered Wednesday also, with some traders citing the triple-A jitters. Shares in Société Générale were down over 18% in afternoon Paris trading and BNP Paribas shares slid over 10%. President Nicolas Sarkozy, who interrupted his summer holiday on the French Riviera for an unscheduled meeting with some of his cabinet Wednesday morning in Paris, will make decisions on … Read more

Six Republicans named to deficit super panel

by

(Reuters) – Republicans named their six members to a congressional deficit-reduction super committee on Wednesday, setting the stage for an attempt to create bipartisan agreement on taxes and government spending. Senators Jon Kyl, Rob Portman and Patrick Toomey were selected by Senate Republican Leader Mitch McConnell. House of Representatives Speaker John Boehner, the top Republican in Congress, named Representatives Dave Camp, Jeb Hensarling and Fred Upton to the committee. The panel is known as the Joint Select Committee on Deficit Reduction and was established to find $1.5 trillion in additional budget saving over 10 years. Full article available @: http://www.reuters.com/article/2011/08/10/us-usa-debt-super-committee-idUSTRE7786DY20110810?feedType=RSS&feedName=topNews&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+reuters%2FtopNews+%28News+%2F+US+%2F+Top+News%29&utm_content=Google+Reader

Obama has SEC Attack Standard & Poor’s

by

Standard & Poor’s, whose unprecedented downgrade of US debt triggered a worldwide sell-off in equities is pushing against a US government proposal that would require credit raters to disclose “significant errors” in how they calculate their ratings. S&P, accused by the Obama administration of making an error in its calculations leading Friday’s downgrade, raised concern about the proposed new corrections policy and other issues in an 84-pg letter to the Securities and Exchange Commission, dated August 8. The SEC is weighing sweeping new rules designed to improve the quality of ratings after their poor performance in the financial crisis. The … Read more

Dollar Advances as Fed Fails to Counter Global Growth Concerns

by

Aug. 10 (Bloomberg) — The yen gained, approaching a post- World War II high versus the dollar, as the Federal Reserve’s pledge to keep interest rates at a record until mid-2013 failed to convince investors global growth will be sustained. The euro extended its drop against the dollar as European stocks fell amid speculation yesterday’s gains couldn’t be sustained. The Swiss franc weakened after the nation’s central bank said it expanded measures to counter the currency’s strength. The pound dropped after Bank of England Governor Mervyn King said “headwinds” to growth are intensifying. “A lot of people looked at the … Read more

Obama Says Markets Don’t Doubt U.S. Ability to Pay Debts

by

Aug. 8 (Bloomberg) — President Barack Obama, breaking his silence on the downgrade of federal debt, said that the U.S. “always will be a AAA country” and that he will release a new proposal to deal with the federal deficit in the coming weeks. The main obstacle facing the U.S. is the “lack of political will in Washington” to solve the country’s problems, Obama said at the White House in his first public comment since Standard & Poor’s lowered the credit rating on U.S. debt to AA+ from AAA on Aug. 5. The debt downgrade is “not so much because … Read more

‘s Business as Usual

by

    Federal Reserve officials publicly declared it was business as usual in the face of Standard and Poor’s downgrade of US government debt, but privately they acknowledged these were unchartered waters. Within 90 minutes of S&P’s decision, a joint release from US banking regulators declared that, despite the downgrade of US paper, there would be no change in the risk-weighting of treasury bills, bonds and notes or any paper guaranteed by the US government. In other words, banks do not have to post any additional capital against their Treasury positions. Regulators also announced that the treatment of US treasuries … Read more

Geithner Rips S&” Move on Downgrade

by

Treasury Secretary Timothy Geithner ripped Standard & Poor’s two days after the ratings agency downgraded US debt, saying the stunning move was based on a “lack of knowledge” about the nation’s finances. Geithner also said the debt crisis presents Congress with a chance to “earn back confidence of investors around the world” and he reiterated his support for President Obama, who asked Geithner to stay on even as calls intensified over the weekend for his resignation. “S&P has shown really terrible judgment and they’ve handled themselves very poorly,” he said in an exclusive interview with CNBC. “And they’ve shown a … Read more

Beyond debt woes, a wider crisis of globalization?

by

(Reuters) – The crises at the heart of the international financial and political system go beyond the debt woes currently gripping the Western world and to the heart of the way the global economy has been run for over two decades. After relying on it to deliver years of growth, lift millions from poverty, keep living standards rising and citizens happy, nation states look to have lost control of globalization. In the short term, that leaves policymakers looking impotent in the face of fast-moving markets and other uncontrolled and perhaps uncontrollable systems — undermining their authority and potentially helping fuel a wider backlash and … Read more

THE GREAT FINANCIAL MIGRATION

by

  Financial Institutions around the world and especially those in Europe and the USA face a crucial set of choices about the future of their institutions. Western Governments are riddled with debt and their only way out is decades of austerity and taxes, but the new world is a mobile world, globalization has set limits on how much a government can impose it’s will on the corporations and citizenry of a nation. Excess taxes and austerity will lead to a mass financial migration to emerging markets. Having spent most of my life in Asia, I can not remember a time … Read more

”

by

Read this comment from Warren Buffett about the S&P downgrade.  There is no question in his mind that the U.S. debts are money good because the U.S can print money.  He goes on to say that inflation is an entirely different matter.  People that understand Buffett’s thinking, know that he believes stocks are the ultimate protection from the ravages of inflation on purchasing power.  You can be sure that Buffett will be buying, selectively of course, if the market plunges on Monday.   Buffett would rate U.S. ‘quadruple-A’ Published: Aug. 6, 2011 at 9:20 AM Warren Buffett, Chairman & CEO … Read more

Western Leaders Seek to Contain Euro-Crisis Market Turmoil

by

Western leaders huddled on preventing the debt crisis from spreading to the core of the euro area after the biggest weekly decline in global stocks since 2008. President Barack Obama and British Prime Minister David Cameron joined telephone consultations with euro-area counterparts yesterday as investors signaled concern a July 21 agreement to expand the 440 billion-euro ($628 billion) rescue fund would fail to stop the rot. Full article available @: http://www.businessweek.com/news/2011-08-06/western-leaders-seek-to-contain-euro-crisis-market-turmoil.html

Berlusconi under pressure as markets lose patience

by

(Reuters) – Bond markets may be succeeding where political opponents have failed, pushing Prime Minister Silvio Berlusconi closer to the exit and opening up fresh uncertainties as Italystruggles to avoid financial disaster. The spread between yields on 10-year Italian bonds over German Bunds briefly climbed past the equivalent Spanish/German spread on Friday morning, underlining the perception that Italy now poses the major threat to euro zone stability. Berlusconi’s response to the crisis, blaming international conditions and pledging unspecified measures to boost growth, has fallen flat with markets suddenly focusing on his divided government and longstanding weaknesses in the Italian economy. … Read more

Congress Fails The People

by

US voters disapproval of Congress hits all time high Disapproval of Congress rose to an all-time high after weeks of rancorous partisan battles over raising the US debt ceiling took the Nation to the brink of default, according a New York Times/CBS News public opinion poll published Thursday. A record 82% of Americans say they disapprove of the way Congress is doing its job, compared with 14% who approve, the poll found. The disapproval rating for Congress was the highest in the 34 yrs the question has been asked in the poll and up from the previous high of 77% … Read more

SEC, Rajat Gupta Drop Their Cases, for Now

by

NEW YORK—The Securities and Exchange Commission dropped its civil administrative proceeding against former Goldman Sachs Group Inc. director Rajat Gupta, but left the door open to pursue insider-trading charges against him in a civil lawsuit. The agency “is fully committed to the case and will proceed as appropriate,” a spokesman said Thursday. Specifically, the agency said that “it is in the public interest” to dismiss the administrative case but that “dismissing these proceedings will not prevent the Commission from filing an action against Mr. Gupta in United States District Court.” The SEC brought the administrative case against Mr. Gupta in … Read more

Small Firms Hunger for Sales, Not Credit .

by

Small-business lending has been in trouble, but is there an explanation beyond the widespread perception that banks are denying credit, and starving small entrepreneurs? Clearly, the financial crisis and recession whacked banks and curtailed lending to small companies. Lending still hasn’t returned to prerecession levels. But here’s an alternative view of the principal cause: A range of observers report that, in many cases, small businesses don’t want loans. Their sales are so weak they can’t justify taking on debt to expand operations. “It’s the sheer lack of expectation that they’re going to grow their company,” says Bernie Kuechler, of Barlow … Read more

I.M.F. Chief to Face French Investigation

by

PARIS — A French court on Thursday ordered an investigation into charges that the International Monetary Fund’s new managing director, Christine Lagarde, had abused her authority in a 2007 dispute involving a multimillion-dollar payout to a French tycoon while she was the finance minister of France. The ruling by the Court of Justice of the Republic, which oversees the actions of French ministers, means that Ms. Lagarde may have to gird for a possibly lengthy legal process to defend against the criminal charge. But legal experts said it was unlikely to interfere with her management of the fund, which was … Read more

Bernanke Models Prove Faulty as Fed Forecasts Succumb to Downward Revision

by

Chairman Ben S. Bernanke and his Federal Reserve colleagues are preparing to meet next week as two-year Treasury yields at a record low signal a U.S. economy on the knife’s edge between growth and contraction. Guiding their assessment of the outlook for the world’s largest economy will be forecasts contained in the so-called Teal Book, a confidential staff report with a blue-green cover. Policy makers’ confidence in those forecasts may be tempered as the course of the expansion has confounded their expectations. Of 12 Fed staff forecasts since the beginning of 2010, seven have been downward revisions to the near-term … Read more

Fannie Mae seeks $5.1 billion more from taxpayers

by

(Reuters) – Mortgage finance giant Fannie Mae said it would ask for an additional $5.1 billion from taxpayers as it continues to suffer losses on loans made prior to 2009. The largest U.S. residential mortgage funds provider on Friday also reported a second-quarter net loss attributable to common shareholders of $5.2 billion, or 90 cents per share. Including the latest funding request, Fannie Mae has needed $104 billion in government capital injections since the U.S. Treasury seized control of it in 2008 during the financial crisis. Fannie Mae has paid back $14.7 billion in dividends. Fannie said in a statement … Read more

S&P, Moody’s Under Investigation

by

Italy seized documents of S&P, Moody’s over suspected ‘Anomalous’ fluctuations Italian prosecutors seized documents at the offices of rating agencies Moody’s and Standard & Poor’s in a probe over suspected “anomalous” fluctuations in Italian share prices, a prosecutor said Thursday. via S&P, Moody’s Under Investigation | Live Stock Trading News | Equities, Forex, Gold, Silver and Oil Trading.

Bottoms rarely look like Thursday’s rout – Mark Hulbert – MarketWatch

by

By Mark Hulbert, MarketWatch CHAPEL HILL, N.C. (MarketWatch) — Market declines rarely end with days like Thursday’s 513-point drop for the Dow. So even if you think that we’re just suffering a mere correction within an ongoing bull market, you still should be prepared for lower prices in coming sessions. That at least is the conclusion that emerged from my analysis of past bear market bottoms. The days on which those bear markets actually registered their final lows typically were rather uneventful — nothing like what we saw on Thursday. via Bottoms rarely look like Thursday’s rout – Mark Hulbert … Read more

The President will be asking Congress to raise the debt ceiling again.

by

Normally, the strongest  time of year for the market is the 4th quarter.  It may be different this year.   Note this email response from the senior Senator from Utah. “Thank you for contacting me to express your thoughts and concerns about recent debate on our nation’s debt and budget negotiations.  I appreciate your timely input on this very important topic. As you may have heard through the news media, a compromise proposal was negotiated over the weekend of July 30th.  The compromise proposal passed the House on August 1, 2011 by a vote of 269-161, the Senate on August … Read more