Economic News Articles in the Great Recession — Archive for the week of 03-18-2012
The euro crisis finally moved out of the headlines (almost) for a week. Don’t worry; it’ll be back soon enough … in spite of the sigh of relief by the European Central Bank chief, who said that we have now seen the worst of the euro zone crisis. Famous last words like the claim a hundred years ago by the U.S. Patent Office chief, who said that the patent office might as well close because everything had been invented that can be invented. The same day that the ECB’s chief heaved a global sigh of relief, Ireland was reported to be officially back in recession. I guess The Great Recession won’t be over until the fat lady, Merkel, sings.
Meanwhile, China stepped into crisis news for the first time. China is showing a few cracks from the Great Recession at last. You can’t hold out against mother nature, you know. Global storms affect everyone.
Treasury bonds have been slowly rising. This raises two concerns. As they go up, so other interest, such as on home mortgages, tends to go up. Mortgage interest has spiked upward recently, ending the greatest lows since the Great Depression. The other latent concern raised by rising interest is the ability of the U.S. government to pay its debts. While the economy has ratched up the most phenomenal deficits in history for the past four years, it has also paid the lowest interest on its debt that a nation could hope for, making those deficits temporarily affordable.
Of course, we’ve seen that the Fed has plenty of ways of playing with this interest for now to keep the cost of U.S. debt down, such as buying bonds indirectly to create demand for them in order to hold own the amount of the interest the government has to offer in order to sell enough bonds. Meanwhile, a former vice-chair of the Fed warned that we must keep up these lavish deficits, or the economy will fall off a cliff. Doesn’t that mean the U.S. is now fully caught in a trap of having to spend itself into oblivion in order to keep the old economic engine functioning?
Stocks entered a temporary dead zone. Don’t worry about that either. They’re likely to go back up soon, as the Fed will do whatever it needs to in order to pump the market back up … such as promising Quantitative Easing III … if necessary. That would mean more printing money out of thin air, which would also be used to buy bonds back from banks in order to create artificial demand for U.S. debt and keep interest on the debt down. It’s artificial in that the U.S. essentially becomes the buyer of its own debt.
Ben Bernanke believes the nation needs more debt at an individual level, too. He reported, as if it were a problem, that individual debt remains two low, as does consumption. Apparently, the only economic model the U.S. can conceive of is that we need to consume as much as possible in order to assure others of a good living. Is that really sustainable long term? Heck no, but it’s fun while it lasts. So, who cares?
Housing in the U.S. finally appears to be crawling like a mole out of its dark hole. I know that is certainly true in my own neighborhood where tiny houses that once belonged to cole miners have been selling for around $300,ooo in the past two months. Two homes sold in about two weeks time within a block of each other. Some buyers have even reported getting caught in bidding wars. Of course, my town was far less affected by the Great Recession than many others, but there were a few signs that new housing is on the rise across the U.S. That news is mixed, though. While permits for new home construction went up and prices of new homes went up, sales of new homes went down. Apparently, the market did not have much price elasticity, as the wistful rise in prices paralleled a fall in sales.
Shell bets that oil prices are up for the long-run. So do I. The Iranium Reaction is NOT going away. In fact, it remained the most prominent of news stories this week. Israel’s PM spent his week prepping the public for war with Iran. While Massad and the CIA announced that Iran has yet to build a nuclear weapon, this was not news. NO ONE thinks Iran already has a nuclear weapon. If they did, it would likely have been used. That’s the point: once they get a nuclear weapon, it is already too late. Their interest in the Middle East is aggression — creating an Islamic Caliphate — not self-defense. There is only one reason they would not use a nuclear weapon as soon as they have one — the mere having of one gives them huge bargaining power over all events Middle Eastern.
Here are the stories:
China syndrome — following the Great Recession to the Great Wall
- 03/20 China’s outlook is shaken; Stocks Open Lower Worrisome economic data out of China, whose blistering economy helped sustain global growth during the economic downturn, sent the Dow Jones industrial average and the Standard & Poor’s 500 toward their biggest losses in two weeks.
Economic indicators seen in the news this week
- 03/20 Don’t Ignore Quiet Surge in Bond Rates – Cause for Concern Rising for the fifth session in a row, the yield on the 10-year Treasury note hit 2.375% on Monday — its highest level since late October. Everyone is concerned that if you have a rapid rise in yields, you run the risk of at best slowing things down.
- 03/20 Oil Price Set for Long-Term Rise: Shell CEO Priming the market, the CEO of oil giant Shell predicted that the cost of oil will continue to rise long-term. “In the very long term we will see prices going up because of high demand … as it gets more expensive to get the resources out of the ground.”
- 03/21 Home building permits near 3.5-year high Permits for homebuilding neared a 3.5-year high in February, suggesting a budding recovery in the housing market was still on track even though groundbreaking activity slipped.
- 03/21 Home sales show underlying strength, prices rise U.S. home sales fell in February, but upward revisions to the prior month’s pace and the first yearly increase in prices in 15 months suggested the housing market recovery remained on track.
- 03/21 Oil Prices at $200 a Barrel? Some Think It’s Coming Signs that crude futures may hit much higher levels are converging, say oil traders and analysts, some of whom predict that Brent crude could reach $200 a barrel within the next 12 months.
- 03/22 Jobless claims fall to four year low Initial claims for state unemployment benefits fell 5,000 to a seasonally adjusted 348,000, the lowest level since February 2008. This news is tempered by a slowdown in China while some euro zone economies are already in recession.
- 03/22 Mortgage rates top 4% for the first time in three months The average U.S. rate on a 30-year fixed mortgage has popped above 4% for the first time in more than three months. The sharp increase suggests the window to buy or refinance a home at historically low rates may be closing.
- 03/22 Stocks: ‘Deadzone’ trading Traders say volumes have been abnormally low this week, indicating that investors don’t have strong convictions about the direction of the market. Investors were rattled by global growth slowdown as both China and Germany reported soft manufacturing data.
- 03/24 Fannie, Freddie Consider Mortgage Write-Downs Both firms concluded that giving homeowners a big break on their mortgages makes good financial sense in many cases, saying that principal reduction for many homeowners would prevent larger bank losses and keep people in their homes.
- 03/24 Purchases of New Houses in U.S. Decrease for Second Month Purchases of new homes in the U.S. unexpectedly fell in February for a second month, a sign the recovery in the housing market may be uneven. Sales dropped 1.6 percent from a 318,000 rate in January that was weaker than previously reported.
Euro crisis updates as the Great Recession goes viral
- 03/22 European Central Bank chief Mario Draghi says worst of euro crisis over The ECB President has said the worst of the eurozone crisis is over. (Famous last words?) Latest figures for Europe’s most important economy, Germany, show that manufacturing shrank in March, and new orders fell at the fastest pace this year.
- 03/22 Republic of Ireland falls back into recession The Republic of Ireland fell back into recession in the last three months of 2011, official figures have shown. The Republic’s initial financial woes were caused by the bursting of a property bubble.
Federal Reserve actions tracked in the economic headlines
- 03/20 Former Fed Vice Chair Warns US Economy Headed for Cliff in 2013 Alan Blinder warned that automatic U.S. spending cuts across the board (the present track) will severely damage the economy in 2013 unless Congress can work together now to agree on carefully targeted cuts. He doubts they can.
- 03/22 It’s all about encouraging debt and consumption at the Fed “Right now, in terms of debt and consumption, we’re still way low relative to the pattern before the crisis,” Bernanke
The Iranium Reaction as it makes and shakes the news
- 03/19 Behind the scenes of UN nuclear inspection of Iran In a first interview with an Israeli media outlet, an IAEA inspector cautiously explains what is known about Iran’s nuclear program. How Iran deceived the UN..
- 03/19 Mossad, CIA agree Iran has yet to decide to build nuclear weapon Israel’s intelligence services agree with American intelligence assessments that there is not enough proof to determine whether Iran is building a nuclear bomb, but Israeli officials press for attack.
- 03/19 Netanyahu is preparing Israeli public opinion for a war on Iran Editor-in-chief says that what looks like a preparation for war, acts like a preparation for war, and quacks like a preparation for war, is a preparation for war. Netanyahu says Iranian threat is existential; Israel must prevent a “second Holocaust.”
- 03/19 Top Israel official: Move to cut Iran from SWIFT network is ‘mortal blow’ to Tehran Finance Minister Yuval Steinitz said Sunday that SWIFT’s decision to halt Iran’s electronic fund transfers is a tremendous blow that could cause collapse of the Iranian economy. (Reportedly, Netanyahu requested the move in his meeting with Obama.)
- 03/19 Veteran U.S. political commentator: I would be shocked if Israel were to attack Iran “If the Israeli military attacks Iran unilaterally, it will be the stupidest thing that Israel has done since the 1982 incursion into Lebanon, stupid and even more disastrous.” [That didn't stop them from entering Lebanon in 1982.]
- 03/20 Gunboat diplomacy: America launches Persian Gulf surge Washington is planning to deploy even more ships, subs and choppers to the Persian Gulf. Iran alleges The USS John C. Stennis aircraft carrier allegedly went “inside the manoeuvre zone” where Iranian ships are conducting 10 days of war-games.
- 03/20 SWIFT reaction: Iran ‘will retaliate’, closing Hormuz Strait Tehran’s threats to block the Strait of Hormuz in response to sanctions are not mere words, warned Iran’s senior spokesman on sanctions. As long as the West ignores international law to promote its interests, Iran will retaliate, he said.
- 03/20 Waiting for the Messiah: Netanyahu addresses Evangelical Christian gathering in Jerusalem Fundamentalist fervor in Israel: Evangelical pastor John Hagee, head of the largest pro-Israel lobby in U.S., compared Israel’s prime minister to Moses and King David … and half-jokingly to the Messiah. “He changed the path of Christianity in America.”
- 03/21 IMF warns of oil risk from Iran Christine Lagarde warned Tuesday that crude oil prices may spike by up to 30 percent if Iranian supplies were disrupted, causing “serious consequences” for the global economy.
- 03/21 Russia: Iran nuke attack on Israel would also destroy ‘Palestine’ Russia warned Tuesday that Iran would have no option but to develop nuclear weapons if it came under attack from either the United States or Israel over its contested atomic program.
- 03/24 Tension with Iran adding $20-30 to oil prices: Obama Pump prices are hovering near record highs as markets worry about tensions in the Middle East, with Obama moving to clamp down on criticism of his administration on the issue in an election year.
Articles of Justice during the Great Recession
- 03/22 Goldman Sachs loses bid to end lawsuit over risky collateralized debt obligations Goldman Sachs Group Inc lost its bid to dismiss a lawsuit accusing it of defrauding investors by selling risky debt linked to subprime mortgages that it planned to bet against.
- 03/24 Credit Suisse halves total pay for chief executive Credit Suisse slashed the total compensation for its chief executive, Brady Dougan, by 55% in 2011. That follows his bank’s poor performance last year, when net income slumped 62% and profit at its investment banking unit was wiped-out. (About time.)
U.S. government moves (and blunders) in articles about the economy
- 03/20 Obama’s Executive Order Allows Nationalization of All Industry and Resources in Times of Emergency President Barack Obama issued an Executive Order on March 16 giving the White House absolute control over all the country’s natural resources in case of a natural disaster or during a time of war.
Other economic updates / miscellaneous economic news articles
- 03/20 Sweden moving towards cashless economy Sweden was the first European country to introduce bank notes in 1661. Now it’s come farther than most toward getting rid of them. Public buses don’t accept cash; fairs are purchased with a cell phone text. Some banks have stopped handling cash.
- 03/20 Video: Are We Headed for Another Great Depression? The Great Recession’s economic situation, social unrest, and geo politics mirror the scenario that turned into the Great Depression.
- 03/21 UK’s Chancellor Gives Rich Priority Over Poor The chancellor — and by extension the government — thinks that the U.K.’s super-rich deserve lower taxes while pensioners should pay more. The proposed budget indicates that Conservatives are reverting to type, eager to help out their friends in the City.