Sunday, July 31, 2011

Sunday roundup (07-31-11)

Obama Says Deal Has Been Reached to End Debt Crisis (Reuters) White House, congressional leaders reach debt-limit deal (The Washington Post)

Debt ceiling compromise is likely to mean further fiscal challenges for states; cuts expected (The Associated Press)

The debt-ceiling debate is taking a toll on the economy (USAToday)

Bill Gates Now Has More Money Than The Federal Government (The Business Insider) Brother, Can You Spare a Billion? Apple Has More Cash Than Uncle Sam (Time blogs) Could Apple pull a J.P. Morgan and bail out the U.S. government? (The Los Angeles Times blogs)

Declaring bankruptcy doesn't ease student loans (CBSNews)

Italy, Spain Worries Complicate Greece Aid (The Wall Street Journal)

Spain's socialist premier calls early election as economic woes increase (The Scotsman) Spain prime minister calls early election for 20 November: José Luis Rodríguez Zapatero brings election forward from March as Spain struggles with high unemployment (The Guardian)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Saturday, July 30, 2011

"Significant progress" reported late Saturday on talks to raise the debt ceiling by Aug. 2 deadline

Senate debt vote delayed in quest for elusive compromise: The Senate's top Democrat sounds a newly optimistic tone as a key test vote is delayed to midday Sunday, but is Congress now too partisan to settle on any middle ground? (The Los Angeles Times)

Senate debt vote delay is sign of hope (Politico)

Frantic US debt talks near deal: Reid (Agence France-Presse)

AP sources: Significant progress in debt talks (The Associated Press)

Debt Limit Deal? (The Atlanta Journal-Constitution blogs)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Saturday roundup (07-30-11)

Quote of the Day:

"So finally Germany ... stepped up and they have created this new facility (European Financial Security Facility or ESFS) ... [which is essentially] a European-wide Ministry of Finance. ... The bad news at least if you’re Greece or Italy or Spain or Portugal is that from now on your fiscal policy is going to be dictated by Germany. So this is what I call the financial 'Fourth Reich'. Germany has accomplished financially what it has never been able to do militarily since the days of the Holy Roman Empire, which is to basically gain control over Europe." -- Jim Rickards, investment banker and risk manager (King Wold News)

State, Local Cutbacks Slow U.S. Growth for a Record Four Quarters in Row -- "the longest slide since at least 1947" (Bloomberg)

Last-minute debt deal still eludes Congress: In public, at least, neither Democrats nor Republicans show much inclination to work out an accord as the clock ticks toward a federal default. (The Los Angeles Times) With default deadline near, debt-ceiling talks stall (The Los Angeles Times) GOP-Led House Rejects Senate Dems Debt-Limit Bill (The Associated Press) White House-Congress US debt limit talks ongoing - Reid (Reuters)

Charting the American Debt Crisis: America has a long history of raising the debt limit to accommodate spending. Below, a look at some of the issues in the debate over the nation’s debt.(The New York Times)

What the Government Debt Crisis Means to You (The Wall Street Journal)

Debt crisis strains banks, threatens consumers (Reuters) Banks prepare for federal cash crunch (United Press International)

Now America warns troops they might not be paid as debt stand-off threatens to plunge world economies back into recession (The Daily Mail)

Seniors: We need our Social Security! (CNNMoney)

Why Are Banks Bulldozing [Properties under] Foreclosures?: It saves them money and helps to eliminate excess housing inventory, but is it really good for the economy? (The Atlantic) BofA Donates, Demolishes Houses to Cut Foreclosures: July 29 (Bloomberg) -- Bank of America Corp., faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer. The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. Cali Carlin reports on Bloomberg Television's "InsideTrack." (Bloomberg)



Unofficial Problem Bank list increases to 995 Institutions (Calculated Risk blog)

Bank jobs in peril as global debt crisis pinches profits: UK's big-name banks expected to put thousands of jobs at risk as profits are hit by the US and eurozone problems (The Observer)

Italian Bank Intesa Sanpaolo Reaches Deal To Cut 4,000 Jobs (The Wall Street Journal)

Pilgrim's Pride closing chicken plant in Dallas [eliminating 1,000 jobs] (Bloomberg)

Terry Smith [CEO of Britiain's Tullett Prebon] says the world is living in a fantasy (FT Alphaville blog) Europe 'living in fantasy' over crisis [audio interview] (BBC4)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Friday, July 29, 2011

Friday roundup (07-29-11)

Economic recovery falters dramatically in first half of year: Government figures show the economy grew at a weak pace of 1.3% in the second quarter and a revised 0.4% pace in the first quarter. -- "'These are disastrous numbers for the economy,' said Bernard Baumohl, chief global economist at the Economic Outlook Group. 'We're seeing some clear, concrete signs that the economy is teetering on the edge of recession.'" (The Los Angeles Times) "Mark Vitner, senior economist at Wells Fargo, called the GDP report a 'game-changer.' ... 'It does raise some legitimate questions how quickly we can rein in government spending without doing more harm than good,' Vitner said." (Marketwatch)

G.D.P. Shocker: U.S. on Verge of Double-Dip Recession (The New Yorker blogs) Economists React: ‘Recovery? What Recovery?’ (The Wall Street Journal blogs) "In a Twitter message, economist Justin Wolfers of the University of Pennsylvania's Wharton School said he thinks there's a 40 percent chance the economy has already been in a recession for the past four months." (The Associated Press)

Are We Headed for a Double-Dip Recession?: Bloomberg's Dominic Chu explains why economic growth is slower than expected. (ABCNews)


Real GDP still below Pre-Recession Peak, Chicago PMI declines, Consumer Sentiment Weak (Calculated Risk blog) "'The economic indicators are pretty disturbing in light of the fact that policy is going in the opposite direction of a normal response to an economic slowdown,' said Chad Stone, chief economist at the Center on Budget and Policy Priorities." (CNNMoney)

‘Great Recession’ even deeper than thought (Marketwatch)

Layoffs May Worsen if Economic Growth Doesn't Pick Up (CNBC)

Senate quickly acts to block House debt-ceiling plan (The Los Angeles Times) [which reported earlier:] House approves revised Boehner debt ceiling plan -- "It now moves to the Senate, where Democratic Majority Leader Harry Reid has said it will go nowhere." (The Los Angeles Times)

Global Concern Over U.S. Debt Ceiling Disagreement (The New York Times) Europe Losing Patience with US Debt Delays: European leaders have long expressed confidence that the US would find a resolution to its ongoing debt impasse. But now there is growing concern that it won't. German Finance Minister Schäuble has urged US lawmakers to act responsibly and others have warned of unpredictable consequences if they don't. (Der Spiegel)

Debt ceiling debate distortion - this is a jobs crisis, not a budget crisis by Robert Reich (The San Francisco Chronicle)

Bank cash cushions can soften U.S. credit blow (Reuters)

Ugly choices await Treasury if debt deal isn't reached (McClatchy Newspapers)

Consumer Sentiment Falls to Lowest Level Since March 2009 (Reuters)

U.S. Homeownership Falls to Lowest Since ’98 (Bloomberg)

Alabama County Reschedules Bankruptcy Meeting For Aug. 4 (The Wall Street Journal)

Central Falls [RI] bankruptcy decision set for Monday (The Associated Press)

Mayor says Chicago faces $635M budget deficit (The Associated Press)

Merck To Cut Up To 13,000 Jobs, Reports 2Q Net Gain (The Wall Street Journal)

575 Nursing Home Workers To Lose Jobs In Closure: Four Former Haven Healthcare Facilities In Receivership Scheduled To Shut Down (The Hartford Courant)

Regulators Shut Banks in Ind, Va, SC; 61 in 2011 (The Associated Press)

Virginia Business Bank of Richmond VA had a troubled assets ratio of 181.8%. (BankTracker)

BankMeridian, N.A. of Columbia SC had a troubled assets ratio of 387.4%. (BankTracker)

Integra Bank National Association of Evansville IN had a troubled assets ratio of 155.1%. (BankTracker)

"Moody's Places AAA Ratings Of 177 U.S. Public Finance Issuers On Review For Possible Downgrade Due To Review Of U.S. Government's AAA Rating" (Washington's Blog)

The Euro Crisis: Big Rescue, Big Doubts: Europe's latest bailout plan is so full of holes it may not work (Bloomberg Businessweek)

Moody's threatens Spain rating cut (Reuters)

Spain in ‘Danger Zone’ on Europe Crisis: IMF (Bloomberg) IMF Report Urges Further Economic Fixes For Spain (The Wall Street Journal)

Greek debt crisis and power plant explosion leave Cyprus on 'verge of economic collapse': Island may need bailout following exposure to Greek banks and an explosion that hit the island's finance and tourism sector (The Guardian)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Thursday, July 28, 2011

Thursday roundup (07-28-11)

Global slump warnings if US triggers 'insane' default: A chorus of global banks has warned that Washington risks triggering a global slump and may suffer permanent loss of credibility by flirting with default on America's $14.3 trillion (£8.8 trillion) federal debt. (The Telegraph)

Italy's Borrowing Costs Jump (The New York Times) Italy's bond auction fuels euro-zone debt fears (The Wall Street Journal)

Italian role in next Greek tranche in doubt (Reuters)

Roach Says Chinese Officials ‘Appalled’ by U.S. Debt Impasse (Bloomberg)

[In the US] 73 Percent Say Economy is Getting Worse -- "the highest level since March 2009 when it appeared as though we had sunk into the abyss" (The Mess That Greenspan Made blog) (Gallup)

Debt vote delayed into night as GOP seeks support (The Associated Press)

Big bank CEOs urge debt ceiling action (Politico) [Financial Services] Forum Letter to President Obama and Congress on Nation’s Debt (Financial Services Forum)

S&P: Deficit cuts of $4 trillion [would be] a good start (Reuters)

El-Erian on Jobs, Budget Debate, Downgrade Fear: Mohamed El-Erian, chief executive officer at Pacific Investment Management Co., talks about the debt ceiling debate and the impact a downgrade of the U.S.'s AAA credit rating may have on the global markets. El-Erian speaks with Tom Keene on Bloomberg Radio's "Surveillance." Steven Wieting, managing director of economic and market analysis at Citigroup Global Markets Inc., also speaks. [July 27] (Bloomberg)




Debt ceiling deadlock: Who will get paid? (CNNMoney)

U.S. Contingency Plan Gives Bondholders Priority (Bloomberg)

Muni issuers put on notice that fate tied to U.S. (Reuters) As U.S. Credit Downgrade Looms, Municipalities And Pension Funds Seen To Be At Risk (The Huffington Post blog)

Will Debt Feud Clip Future Economic Growth? (CNBC)

Why the Debt Crisis Is Even Worse Than You Think: If Washington is deadlocked now, how will it deal with the much bigger debt problems that lurk in the decades to come? (Newsweek)

Kansas City Manufacturing Survey: Manufacturing activity slows in July (Calculated Risk)

Container-Ship Plunge Signals U.S. Slowdown (Bloomberg)

In Chicago, A Test Of Wills Over A Budget Deficit -- "Chicago faces a $600 million budget gap next year — not to mention the $31 million deficit this year." (National Public Radio)

Cook County [the county in which Chicago is located] facing big budget deficit -- "$116 million this fiscal year and $315 million for 2012." (WBEZ)

HSBC may cut more than 10,000 jobs: report (Reuters)

[British] Ministry of Defence to axe 7,000 more civilian jobs: Cash-strapped department to make further redundancies in effort to bring soaring budget under control (The Guardian)

Credit Suisse’s Dougan Plans to Cut About 2,000 Jobs as Profit Drops 52% (Bloomberg)

Boston Scientific to Cut as Many as 1,400 Jobs in 2 Years (Bloomberg)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Is it a recovery yet? (Weekly report, 07-28-11)

A recovery would be indicated by weekly initial jobless claims holding below 500,000. (See this post.)

IT'S A RECOVERY! (And it has been a recovery for every week since the Nov. 25, 2009 report, with the exception of the Aug. 19, 2010 report.)

"Applications for unemployment benefits fell more than forecast last week to the lowest level since April, a sign the weakness in the labor market is fading." (Bloomberg)

"The Labor Department figures for the week ending July 23 showed that claims nationwide dropped 24,000 from the previous week to 398,000. The four-week moving average, often considered a more reliable indicator of claims, also fell 8,500 to 413,750." (The Wahsington Post blogs)

Not everyone is enthusiastic, though.

"If the Washington continues to play hardball on this debt issue, we are going to see shut down parts of the government like back in 1995. That will cause a spike in claims. Believe me, we are not seeing a miraculous comeback in the job market. It's still pretty grim." -- Robbert van Batenburg, head of global research, Louis Capital Markets, New York (Reuters)

"Applications usually fall far below 400,000 in a period of rapid hiring." (Marketwatch)

SEE LAST WEEK'S POST HERE.

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Wednesday, July 27, 2011

Wednesday roundup (07-27-11)

Europe's hot summer as Italy and Cyprus join sick list: Fears of recession in Italy and the Germans' reluctance to back the EU's bail-out fund with real muscle have set off fresh eurozone tremors, pushing yields on Southern European bonds back to levels seen before last week's emergency summit. (The Telegraph)

Six reasons Europe's debt crisis isn't over (Time blogs)

Greece's Debt Rating Spirals Further Into Junk Status (Reuters) Greece Will Default on Debt After EU Plan Takes Place, S&P Says (Bloomberg)

Roubini Says Ireland, Portugal Are Insolvent - Report (The Wall Street Journal) L'économiste Nouriel Roubini prédit l'éclatement de la zone euro (Le Matin, in French) Crisi: Roubini, Irlanda e Portogallo sono insolventi (Die Zeit [in German]) (Corriere della Sera, in Italian)

Italian banks fall as Italy/Bund spread widens (Reuters)

[Swedish automaker] Saab Auto Could Face Bankruptcy In 14 Days - Labor Union (The Wall Street Journal)

Fed's Beige Book: "Pace of economic growth has moderated" (Calculated Risk blog) CFNAI — Toeing the Line [a Fed indicator showing us near or in a recession] (The Big Picture blog)

CEOs Say Yes to Congress on Removing Tax Breaks (Reuters)

Insurance Cost Against US Default Hits Record (The Financial Times) This Can’t Be Good… [U. S. Debt Default Swaps Invert for First Time] (The Mess That Greenspan Made blog)

Republican Leaders Voted for Debt Drivers They Blame on Obama (Bloomberg)

Debt showdown Q&A (Minneapolis Star-Tribune)

A look at what will happen if agencies downgrade U.S. debt (McClatchy Newspapers) US downgrade’s impact worldwide: Worse than Lehman collapse -- "By regulation and mandate, most top banks and institutional investors can’t hold paper below AAA rating. Consequently a downgrade in the US credit rating will trigger a massive sell-off in Treasuries all over the world. I can hardly overstate the impact of this". (The Asset.com)

Blinder: Political Gridlock Puts Economy at Risk: The U.S. is shooting itself in the foot over the debt-reduction debate, says Alan Blinder, a professor of economics at Princeton University and a former vice chairman of the Federal Reserve. Even considering default is a "ridiculous debate" that could lead to a downgrade of U.S. debt, he tells WSJ's E.S. Browning. (The Wall Street Journal)


Poll: Plurality say Congress is corrupt (United Press International)

Layoff Notices [in the State of Connecticut] Top 3,000 As Unions Prepare To Vote (The Hartford Courant)

Romania to Cut 1,300 Jobs in Energy Companies to Meet IMF Pledge (Bloomberg)

The scourge of 'peak oil': When demand for oil consistently surpasses supply, experts warn that our lives will look "very differently". (Al Jazeera)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Tuesday, July 26, 2011

Tuesday roundup (07-26-11)

Lagarde: IMF May Need More Financial Resources To Tackle Crises (The Wall Street Journal)

Eurozone debt crisis could prove 'very costly' for the world, warns IMF: The International Monetary Fund (IMF) has urged eurozone leaders to take immediate action over the region's debt crisis, warning it could prove "very costly" for the world. (The Telegraph)

S&P sees 2nd Greek debt haircut, new downgrade: report (Reuters)

Italian and Spanish borrowing costs rise as Greek bailout fails to convince: Benchmark bond yields soar amid fears that crisis will spread to Spain and Italy (The Guardian) (The Wall Street Journal) (Reuters)

Weak UK growth puts AAA rating at risk, experts warn: Weak growth is putting Britain's precious AAA sovereign credit rating at risk, experts have warned ahead of Tuesday's lacklustre GDP figures. (The Telegraph)

[The UK's] Sluggish GDP growth highlights 'risk' of double-dip (The FT Adviser)

U.S. likely to lose top rating: economists (Reuters) Deal or no deal? US downgrade looking likely: Market analysts are beginning to think the US will avoid a default, but lose its AAA rating (The Associated Press) House Panel Plans to Question Rating Agencies Over Downgrade Threat to U.S. (The New York Times) Debt ceiling fight: What a downgrade would mean (CNNMoney)

IMF Chief Urges Quick Resolution of US Debt Crisis (The Voice of America) Swift U.S. action on debt needed in global interest: IMF (Reuters)

As Debt Deadline Draws Close, Parties Dig in, Markets Prepare: Monday night's dueling speeches by President Obama and House Speaker Boehner only seem to reinforce the state of the stalemate over raising the debt ceiling. Jeffrey Brown discusses the entrenchment in Washington with The Wall Street Journal's Gerald Seib, The New York Times' Andrew Ross and The Financial Times' Gillian Tett. (PBSNewshour)

Watch the full episode. See more PBS NewsHour.


Obama "Will Not Take Yes For An Answer" On Debt Ceiling Debate (Washington's Blog)

Achuthan Expects 'Double Dip Scare' for U.S. Economy: July 26 (Bloomberg) -- Lakshman Achuthan, co-founder and chief operations officer of the Economic Cycle Research Institute, talks about the outlook for the U.S. economy amid the continued lawmaker negotiations on raising the U.S. debt ceiling and reducing the deficit. Achuthan, speaking with Matt Miller, Deirdre Bolton and Lizzie O'Leary on Bloomberg Television's "InsideTrack," also discusses corporate earnings. [click image to launch video in new window] (Bloomberg)



Debt drama lifts U.S. 2012 recession risk: ECRI economist
[click image to launch video in new window] (Thomson Reuters: Reuters Insider)


But I Thought It [= the Macro Picture] Doesn't Matter? (Financial Armageddon blog)

Gasparino: Administration Downplaying Chance of Default: According to FBN's Charlie Gasparino sources at major banks are saying the administration is downplaying the chance of default even if the debt ceiling isn’t raised in private talks with bankers. (FoxBusiness)




Home Prices in 20 U.S. Cities Fell 4.5% in Year (Bloomberg) New home sales fall in June, prices rise [by 1.6% over previous month] (Reuters) "Builders have little incentive to start projects as the prospect of more distressed properties entering the foreclosure pipeline depresses home values." (Bloomberg) Home prices rise again, but experts are unimpressed: The Standard & Poor's/Case-Shiller index of home prices in 20 metropolitan areas rose 1% from April to May. Some economists dismiss the uptick as seasonal. (The Los Angeles Times)

US Is at the Start of 500-Day Retail Recession: Analyst (CNBC)

Wealth gap widens: Whites' net worth is 20 times that of blacks': All racial groups lost ground in the recession, but blacks and Hispanics lost a bigger share of their net worth, a new study finds. As a result, the wealth gap is at its widest in at least 25 years. (The Christian Science Monitor)

Recession Study Finds Hispanics Hit the Hardest (The New York Times)

Strauss-Kahn rape case hearing delayed again (Reuters)

Is the Cash in Your Bank Really Safe? (Seeking Alpha blog)

Small Town Post Offices Threatened (The Wall Street Journal) Expanded Access study list [the Post Offices that the Postal Service might close] (United States Postal Service)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Monday, July 25, 2011

Monday roundup (07-25-11)

Europe Rates Resume Climb: Borrowing Costs for Spain and Italy Flirt With 6%, in Sign of Lingering Unease (The Wall Street Journal)

Money Funds Deprive European Banks of Cash (The Wall Street Journal blogs)

Moody's says likelihood of Greek default 'virtually 100%': Moody's cut its credit rating for Greece by three notches – leaving it just one position above default (The Guardian) Moody's Downgrades Greece Further (The New York Times) Greece Rating Cut to Second-Lowest Level by Moody’s on ‘Orderly Default’ (Bloomberg)

Greece debt crisis: Relief likely to be temporary: Debt-relief for Greece doesn't look enough for a permanent solution, its debt-to-GDP ratio could emerge as high as 130% (The Guardian) Greece Still Faces High Debt to GDP Ratio: IIF's Dallara (CNBC)

In Greek Debt Deal, Clear Benefits for the Banks (The New York Times)

Greek bailout could worsen EU debt crisis, warns Moody's (The Independent)

UK household squeeze at its worst for two years: British household finances have deteriorated to the lowest point since the depths of the recession, heightening concerns that the economy may be slipping back into a double-dip downturn. (The Telegraph)

Obama Warns U.S. Debt Threatens ‘Serious’ Damage (Bloomberg)

President calls for compromise, Boehner rejects it: NBC's Chuck Todd summarizes the statements made by the President and the Speaker of the House, respectively, on Monday night. (NBC Nightly News)

Visit msnbc.com for breaking news, world news, and news about the economy


Debt is 'much bigger deal than settling political scores': NBC's David Gregory, moderator of Meet the Press, speaks with Brian Williams about the politics behind the debt debate. (NBC Nightly News)

Visit msnbc.com for breaking news, world news, and news about the economy


IMF urges swift lifting of US debt limit -- "to avoid a severe shock to the US economy and world financial markets" (Agence France-Presse)

Without resolution debt ceiling impasse will damage U.S. economy, drag down others (Postmedia News of Canada)

States have no place to hide from debt crisis (Reuters)

Pimco’s El-Erian Says U.S. Vulnerable to Downgrade Even If Default Avoided (Bloomberg)

U.S. could avoid default a few days longer, new reports say (The Washington Post)

Economists React: Fragile Recovery Can’t Afford ‘Policy Mistake’ (The Wall Street Journal blogs)

'Super Congress': Debt Ceiling Negotiators Aim To Create New Legislative Body (The Huffington Post blog) The Super Congress Will Be - Like the Federal Reserve - a Non-Constitutional Committee: "The Super Congress Amounts To An Institutionalization Of The Gang Structure That Exists Informally (Washington's Blog)

Chart of the Day: The Housing Market Is Worse Than You Think (The Atlantic)

At Best, U.S. Housing Starts Revert to Trend by 2014, Fed Says (Bloomberg)

Postal Service aims to shut down 3,600 offices (CNNMoney)

BlackBerry maker RIM to cut about 2,000 jobs, shuffle executives (The Los Angeles Times blogs)

Drought Withers Smallest U.S. Hay Crop in a Century to Boost Cost of Beef (Bloomberg)

Dominique Strauss-Kahn's Accuser Speaks Out (ABCNews) The Maid's Tale: She was paid to clean up after the rich and powerful. Then she walked into Dominique Strauss-Kahn's room — and a global scandal. Now she tells her story. (Newsweek)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Sunday, July 24, 2011

Sunday roundup (07-24-11)

Quote of the Day:

"Once yields on 10-year Spanish and Italian bonds had blown through 6pc, global leaders knew we risked a second and more dangerous Lehman-AIG debacle within days. You cannot let two world class sovereign states blow up together. 'The situation was really grave,' said Herman Van Rompuy, Europe's president." -- Journalist Ambrose Evans-Pritchard (The Telegraph blogs)

Europe’s Troubled Economies Join the Rescue Team -- "The potential problem is that, after Germany and France, the facility’s next largest guarantors are Italy and Spain." (The New York Times)

Felix Zulauf on the inevitability of further crisis in Europe (Credit Writedowns blog)

Europe and the path to default: With badly designed bailout packages, Europe is increasingly drifting towards a destabilizing debt crisis by Satyajit Das (LiveMint)

Europe’s debt crisis -- "Boone and Johnson speculate that there could be a 'disorderly series of financial sector (i.e., banking) and sovereign defaults' or even 'large-scale capital flight into ‘safe countries.''" (The Washington Post blogs) [Meanwhile, across the globe in South Korea:] Financial watchdogs, banks discuss foreign capital liquidity issue -- "'There was a mention that we have to remain alert as there are uncertainties over how the fiscal crisis in Europe could unfold,' a bank official, who attended the meeting, said on condition of anonymity." (Yonhap News Agency)

Angela Merkel faces revolt in Germany over rescue deal: German Chancellor Angela Merkel is facing a storm of protest at home after yielding to EU calls for radical action to shore up Spain and Italy, raising doubts over her ability to implement the package. (The Telegraph)

Greece urges citizens to repatriate money held in foreign banks: An estimated €15bn is believed to have left Greece as high-income earners moved their money abroad (The Guardian)

Will the Greek Rescue Agreement Solve Sovereign Debt Problems? (Deposit Accounts)

UK growth slump 'to last a decade,' says top economist: Britain is facing a decade of hyper-weak growth as the result of the 20-year credit boom that saw the nation and households build up unsustainable levels of debt, one of the UK's leading economists has said. (The Telegraph)

[US] Money market funds [sharply] cut euro bank exposure (The Financial Times)

Debt Ceiling Charade: The Smart Options (Calculated Risk blog) 11 days until disaster, three options to prevent it (The Washington Post blogs)

Barack Obama warns of 'economic Armageddon' (The Herald Sun of Melbourne)

Jefferson County in Alabama May Vote to File Largest [US Municipal] Bankruptcy July 28 (Bloomberg) [It would be] " the first US local authority to declare bankruptcy since California's Orange County went bust in 1994." (The Guardian)

Mayors tell Congress to compromise on debt-ceiling, add stimulus spending (The Hill)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Saturday, July 23, 2011

Saturday roundup (07-23\-11)

Eurozone debt crisis: Greece bail-out is 'a risk to EU': Europe's second bail-out for the crisis-hit Greek economy risks undermining the foundations of the European Union, the president of Germany's Bundesbank has warned. (The Telegraph)

Zulauf: Greek Bailout is Hogwash (The Big Picture blog)

EU May Accept Greek Default as Crisis Fight Intensifies (Bloomberg)

[US] Congress aims for Sunday solution [on debt] (CNNMoney)

The Calls Grow Louder For Obama To Ignore Congress, And Raise The Debt Ceiling Unilaterally (The Business Insider)

Wall Street bracing for possible downgrade of U.S. credit (The Washington Post)

Debt ceiling impasse imperils safety net (CNNMoney)

Even With A Debt Deal, the U.S. Might Lose (The Wall Street Journal)

U.S. Treasury Yields This Low Make Armageddon Look Doable (Forbes blogs)

Unofficial Problem Bank list declines to 993 Institutions (Calculated Risk blog)

Number of the Week: Low Odds Long-Term Unemployed Will Find Work (The Wall Street Journal blogs)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Friday, July 22, 2011

Friday roundup (07-22-11)

Eurozone debt crisis: EU growth falls to near two-year low: Eurozone economic growth has fallen to its lowest level in nearly two years as the region's crisis led to a dramatic slowdown in its recovery. (The Telegraph)

Eurozone crisis still casts dark shadow (The Financial Post) Europe's big debt deal leaves plenty of room for worry (CNNMoney)

Europe on the Brink by Peter Boone and Simon Johnson (The Peterson Institute for International Economics)

Fitch Ratings Says Greece Faces ’Restricted Default’ After New Debt Pact (Bloomberg) Euro zone ready for Greek selective default: sources (Reuters) [Felix Salmon at Reuters blogs says:] "I can’t remember a major financial story which has been covered so inadequately by the financial press. ... Greece will be the first EU country to default on its debt. But I doubt it’ll be the last." (Reuters blogs)

Fitch First To Downgrade Greece To Speculative Default As Greek CDS Tumble By Most Ever, Analysts Balk At Bailout (ZeroHedge blog)

Greece Debt Plan Falls Short Of Comprehensive Fix As Financial Problems Remain Across Europe (The Huffington Post blog)

Economist Q. & A. on Europe’s Debt Accord (The New York Times blogs)

The Great Global Debt Depression: It’s All Greek To Me (Washington's Blog)

How Tim Geithner Bailed Out a Swiss Bank [= UBS] (CNBC)

A Catastrophe in the Making: Aid workers have long been warning that a famine was approaching in East Africa. Now that it is here, they are struggling to feed millions of victims of what is said to be the worst drought since 1950. The situation is likely to get even worse. (Der Spiegel)

Debt ceiling talks between Obama and Republicans collapse: US on brink of economic crisis after negotiations over outline of $3tn cuts package and tax rises break down (The Guardian) "'A deal was never reached, and was never really close,' Boehner said." (USAToday) "The final sticking point between the two men [Obama and Boehner] is a dispute over $400 billion in tax increases over 10 years, or less than 1% of the total federal budget during that time." (Time blogs) "Mohamed El-Erian, co-chief investment officer at Pacific Investment Management Co., which oversees $1.2 trillion in assets, told Reuters: 'If not reversed within the next few days through crisis negotiations, this breakdown will be highly detrimental to the already-fragile health of both the US and global economies.'" (CNBC)

S&P's Head of Debt Ratings: We're Losing Faith in the U.S. Government (The Atlantic) Obama officials clash with S&P over downgrade threats (Reuters)

Scenarios: Dwindling options left for debt limit talks (Reuters)

Wall Street, companies brace for the worst: a U.S. default ["and the loss of the nation's top AAA credit rating"] (Reuters)

How Congress could spark a credit crisis (CNNMoney) How Congress put our credit rating at risk (The Washington Post blogs)

Debt Talks: Why Fiscal Austerity Is a Disaster for the Economy (Rolling Stone) [versus] Boehner’s letter to House Republicans on debt talks (The Washington Post blogs)

Default may make short cash loans hard to find (Reuters)

Jobless Rates Rise in Most U.S. States (The Wall Street Journal blogs)

Just 49% Say Home Is Worth More Than Mortgage (Rasmussen Reports)

U.S. Economic Confidence Sinks to Lowest Level Since March '09 (Gallup) Lack of Money Tops List of Americans' Financial Worries (Gallup)

Government Weighs Turning Foreclosures Into Rentals (The Wall Street Journal blogs)

Alabama County Commissioners Said to Discuss Bankruptcy Filing (Bloomberg) 80% chance Jefferson County to file for bankruptcy, commissioner Sandra Brown says (The Birmingham News) Here's What You Need To Know About Muni Bankruptcy (The Business Insider)

Small town [of Oakridge OR] seeks $500K to avoid bankruptcy (KVAL)

Regulators close 2 small banks in Florida, 1 in Colorado, making 57 US bank failures this year (The Associated Press)

Southshore Community Bank of Apollo Beach FL had a troubled assets ratio of 322.7%. (BankTracker)

LandMark Bank of Florida of Sarasota FL had a troubled assets ratio of 380.5%. (BankTracker)

Bank of Choice of Greeley CO had a troubled assets ratio of 239.3%. (BankTracker)

Fractional Reserve is Not the Problem (The Daily Capitalist)

Global systemic crisis – Last warning before the Autumn 2011 shock, when $15 trillion of financial assets go up in smoke [dated June 16] (Leap2020)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.

Thursday, July 21, 2011

Thursday roundup (07-21-11)

Euro Zone Heads for Double-Dip (The Wall Street Journal blogs) Eurozone debt fears hit [the region's] business and consumer confidence (The Guardian)

Europe steps up to the plate: Europe's leaders have grasped the nettle. Faced with a spiralling bond crisis in Italy and Spain and the greatest threat to the EU project for 50 years, they have ripped up their bail-out strategy and taken a large stride towards a "liability union". (The Telegraph) Greek crisis averted, but EU's long-term problems remain (The Globe and Mail)

Euro Zone Leaders Clinch Rescue Plan for Greece (The New York Times) Euro Zone Reaches Deal on Greek Debt (The Wall Street Journal) Europe agrees sweeping new action on debt crisis (Reuters)

Massive Iceberg Ahead for the European Monetary Union? (Cliff Küle's Notes blog) [in reference to:] Massive Iceberg Ahead for the European Monetary Union (Credit Writedowns blog)

Greece gets another bailout from Eurozone: The 17 EU nations that use the euro offer Athens $157 billion in loans, on top of a nearly identical aid package last year. Leaders also agree to broaden the resources available to other debt-ridden economies in the region. (The Los Angeles Times) A look at how the bailout works (The Globe and Mail of Toronto)

Germany, France agreed selective Greek default possible - Dutch (Reuters) Dutch Finance Minister: Greece Selective Default Almost Unavoidable (The Wall Street Journal)

The Next Debt Crisis Could Come from Paris: Sarkozy is determined — yet struggling — to cut government spending (Bloomberg Businessweek)

Spain pays record high rates on debt before summit (Reuters)

Why Greece's debt is a problem for the UK [VIDEO] (The BBC)

U.K. June Budget Deficit Higher Than Economists Forecast (Bloomberg)

[British] Police to cut 14 percent of workforce [34,100 jobs] by 2015 (Reuters)

Boehner: House will compromise on debt limit despite tea party holdouts (The Associated Press)

U.S. Risks an August Rating Downgrade If No Deficit Progress, S&P Says (Bloomberg)

Why the U.S. Needs to Cut the Deficit (The Council on Foreign Relations)

How a Debt Downgrade Would Harm America (U. S. News & World Report blogs) S&P Says Likelihood US Is Downgraded To AA As Soon As Early August Is 50-50 (ZeroHedge blog)

Banks Get Scant Help [from US Treasury or the Fed in] Preparing for Default (The Wall Street Journal) Wall St. Makes Fallback Plans for Debt Crisis (The New York Times)

States preparing for debt ceiling default (CNNMoney) California will borrow $5 billion from banks to bypass U.S. debt drama (The Los Angeles Times blogs)

A U.S. default could hurt all state ratings: S&P (Reuters)

Default Is Not An Option – Spread the Word (The US Chamber of Commerce blogs)

Banks Pay Back TARP Funds by . . . Borrowing From Treasury (Yahoo! Finance) U.S. loses $1.3 billion in exiting Chrysler (CNNMoney)

Consumers Use Credit Cards for Necessities as Inflation Cuts U.S. Incomes (Bloomberg)

Layoffs Deepen Gloom (The Wall Street Journal)

NAACP leader says economy can’t get any worse for blacks (The Washington Post)

Alabama county mulls options as bankruptcy looms (Reuters)

Economy's slump likely to extend into summer as job market, manufacturing remain weak (The Associated Press)

U.S. Home Prices Decreased 6.3% in May From Previous 12 Months, FHFA Says (Bloomberg)

Philly Fed Survey: "Regional manufacturing remained weak in July" (Calculated Risk blog)

Utilities See Record Demand as Heat Wave Hits (The Wall Street Journal)

The Debt Crisis and the War Cycle [interview with Richard Hoskins by Cliff Droke] (Green Faucet)

10 Signs That The Americans Have Begun Freaking Out About The State Of The Economy (The Business Insider)

The aim of this blog is to show (mostly from reports in mainstream respected news sources) that there is reason to believe that both the United States and the global economies remain fragile in the wake of the financial crisis of 2008 and that a number of threats that exist today could, if they worsened, bring about economic depression -- not just a minor depression, but a depression worse than the Great Depression. This blog further attempts to show that the financial crisis of 2008 was largely a result of the devastating consequences of excessive risk taking and the absence of effective regulation of such behavior. Furthermore, this blog maintains that not only have the lessons that should have been learned from this experience not been learned, but that the risks to the economy, including the persistent building up of "too big to fail" institutions, have actually increased since the crisis began. Finally this blog also brings to light, from time to time, reports of a parallel threat to economic well-being developing in the energy industry, which suggest that an energy shock may be coming much closer in time than is generally imagined.