America wasn’t founded so we could all be better. America was founded so we could all be anything we damned well pleased – P. J. O’Rourke
GREEK TRAGEDY GOES ON
The markets were down pre-opening this morning, although they have recovered much of that. Oil was way down but that has also recovered much of the earlier losses. It’s still down considerably from where it was a few weeks ago. The Eurozone finance ministers withheld a payment to Greece that was supposed to help them stay afloat until Greece passes major spending cuts and major tax increases to show their willingness to help themselves. You may have noticed that the Greek people are not particularly happy with the thought of this.
Unfortunately, they have little choice in the matter. The rest of Europe is getting tired of their lack of effort to save themselves. It’s a weight not just on the rest of Europe but the rest of the world as well. It’s also not the only European country on the edge of disaster. It’s causing the global economy to feel pessimistic overall. Add to that the fact that China is trying to slow their economy down and it has caused an overall lowering of economic estimates.
Of course, then again this market action is not unusual for summers in general. The reasons given change from year-to-year, but the results are often strikingly similar. Forecasts of doom and gloom, followed by a significant pullback in the markets, followed by an oversold condition that leads to a buying spree when da boyz get back from the Hamptons at the end of summer.
FROM YAHOO FINANCE: THE 10 THINGS YOU NEED TO KNOW TODAY:
- Asian indices were mostly down in overnight trading with theBombay Stock Exchange falling 2.04%. Major European indices are in the red and U.S. futures indicate a negative open.
- Eurozone finance ministers have delayed €12 billion in loans to Greece without which the country will default on its sovereign debt in mid-July. The move is expected to pressure the Greek government to pass €28 billion in spending cuts and tax increases. Meanwhile Greek prime minister George Papandreou is set to face a confidence vote in Parliament tomorrow.Refresher: Here’s who gets slammed if Greece restructures >
- Moody’s threatened to downgrade Italy’s Aa2 credit rating in next 3 months, on concerns that the Greek crisis may push up interest rates in the eurozone and hurt Italy’s recovery.Don’t miss: The 21 countries most likely to default >
- Wages and salaries in the Eurozone were up 2.3% in Q1 2011 from a year ago, but the wage increase was lower than the 2.7% increase in consumer prices, which showed that real wages in the region continued to stay low.
- Moody’s has pushed Tepco’s credit rating to junk status. Tepco’s long-term issuer rating was cut to B1 from Baa3, and its senior secured rating was lowered to Ba2 from Baa2 on account of rising costs from the nuclear disaster at its Fukushima Daiichi plant. Now here are images of devastation in Japan a month after the earthquake >
- PNC Financial Services Group Inc has agreed to buy Royal Bank of Canada’s U.S. retail bank operations for $3.45 billion. The deal would add about 420 branches to PNC’s operations and help it expands its presence in the Southeast of the country. Check out the 16 strongest banks in the world >
- Brazilian airline TAM is buying engines worth $2.2 billion from Rolls Royce for Airbus A350s. Rolls Royce has also signed a 12-year agreement to provide the airline operator with its service support.
- Boeing has secured a $1.7 billion deal to provide Qatar with six 777 jets. Rival Airbus however is expected to announce a bigger $2.4 billion deal for 30 A320neo planes to Scandinavian airline SAS at the Paris Air Show today.
- Bankrupt bookstore chain Borders Group Inc. is expected to name its bidder on July 1st. Thebankruptcy court is expected to hold an auction on July 19 and a sale hearing by July 22. It has however reached a deal with GE Capital to keep 51 of its stores open.
- Goldman Sachs cut its Q2 GDP growth outlook to 2%, from 3%, on weak manufacturing over recent months and high unemployment. The news was a blow to the U.S. economy which was expected to be on its way to a recovery.
For those of you who need to do some office/dorm furnishing , Office Max is offering an offer that expires very soon. Online coupon for up to 40% off furniture at Office Max. Save up to $120! http://t.co/Lofnait
SAVE up to 27% on all outdoor furniture at Target PLUS Free Shipping!! bit.ly/kXBOB2
I’ll let you know what I hear!!
94134gamesmith
Location
San Francisco
Comment
Gamesmith94134: Woodford on Monetary and Fiscal Policy
Recent days, we often talk of the half full and half empty that relevant to the price and value on the currencies they carry. I n the discussion of Woodford on Monetary and Fiscal Policy and Keynesian theory, I felt half hearted in accepting the stimulation in using the excuses on liquidity traps to promote growth, especially when Mr. Bernanke or some experts explain the V-shape recovery in the QEs. When the half full or half empty turn into a full glass of ice cubes; then when you see the full empty of the glass.
In reading Tim Kane, mesa Arizona and JCB Portland, Oregon, they gave fairly good examples on Japan and Korea, which experienced the boom and recession in change the status on their currencies. It is what we must observe now in the interaction on the ice cubes that begin to melt in the glass; its room temperature is the ambience in our present economical reaction. As the sighting on the full glass makes the price and the empty posing on value, we do see the devaluation on the Dollar in relative shift that it went to 73 on the 100 of year 73. Fluidity collapsed toward a outflow since value is not sustainable after the QEII and Mr. Bernanke absorbed all the bonds and spread on with the restoring the strength of the banks and supported on the fiscal policy in the near-zero interest to cut costs.
In proving the marginal adjustment on the unfreeze ice cubes; the pricing collapsed like real estates and durables. Many investors see the margin on the marking of the glass, it is frustrating in setting the strategy to invest or the process of freeze like interest rate at the freezing temperature. This is our present sight on the double-dip economy.
Perhaps, I would implement the Philip’s curve on inflation and unemployment, many Keynesians want the equilibrium on the curve; but it was based on zero, and it was a wrong graphic since we are being devalued. My Lam’s graphic is the extension on the sub-zero that the curve is outward in showing the relative change on the deflation and employment if deflation or deficit is appeared on the market or economy, employment is not based on pricing but fluidity that made the margin on the growth of its economy. How does it make sense to you now, Mr. Krugman?
Regardless how our Keynesians want to stop further recession, any stimulation can only create a further destruction to the global economy. Take an example of California, USA, we have the state deficit built on pension which some state worker retirees get $70,000 a year and some from Corporation get $41,000 a year. They have 40 millions state employees made better than a governor, and many $100,000 policemen and firefighters, I am not a scrooge in disgusting for some made more; but I am just sentimental to the poor and unemployed. Such an ice cube is occupying the half of the glass, and it is hallow inside. What its value on the retired to compare on the price if the state must paid?
When we go back on the American economy, I do not see the falling price substantially relevant to the affordability for its populace; how does gradualism work and how investors discount their investment for a V-shape recovery if the icing continue?
If I am drawing the Lam’s liquidity graphic based on neutrality margin that would have both inflation (CPI AND COMMODITIES) and deflation (DEFICIT OR DEVALUATION); and the ground zero on the 2000 and extended. Also, I would put the natural unemployment on 6.5% based on the transition job markets and disposable old jobs like manufacturers.
Mr. Krugman, show them the margin on the water mark and tell them the ice cubes with holes; then the recovery is right in sight. Monetary and fiscal are moot if the icing continues.
May the Buddha bless you?
Afraid I am more simplistic in my views. I know the Great Depression lasted more than 10 yrs, largely because politicians kept attempting to pay down debt. It ended when spending exploded with WWII, more than 120% of GDP; much more than now. Did we collapse or default? No, it was almost all paid down when Reagan brought us tax cuts, the savings & loan bubble and enormous debt. It got paid down some under Clinton, thanks to the emergence of whole new internet jobs. Bush II brought us tax cuts and the housing/credit bubble – oh, and exploding debt once again.
There are many who feel that only spending on a par with WWII will get us out of the abyss we are in. Maybe they are right, maybe not. I worry that we may be following the same mistakes that caused the Great Depression to last so long. Who knows? Recessions caused by financial collapses are not like ‘normal’ recessions and it is not possible to compare this recovery to ‘normal’ recoveries.
I think our natural unemployment is actually more like 8%. We have never had good employment numbers in recent times without a bubble or a whole new industry (the internet). Think about that…. Absent either of those, 6.5% seems awfully optimistic. The big question is: how do we absorb that many unemployed? How do we recover without another bubble? What will the ‘new normal’ look like?