Economic News Articles – Archive for Week of 01-08-2012

The big news of the past week was that Standard and Poor’s followed through on downgrading the credit ratings of several European nations. European leaders responded with indignation as they fortified their delusion that they should be forever above credit downgrades so long as they are “working” on a solution. Beyond the borders of Delusia, what I call the Iranium reaction continued to heat up. The U.S. and the Middle East inched toward possible war with Iran, which could seriously threaten the global economy.

Economic indicators tracked in the week’s headlines:

• Gold hits one-month high as demand blooms Gold rose for a second day on Wednesday, hitting its highest in a month, as evidence of strong demand from major consumer China helped boost the price. China is now the world’s number two buyer of the precious metal. China’s buying greatly increased las
• Labor Pains: Weekly Jobless Claims Rise to 6-Week High The number of Americans applying for first-time jobless benefits rose on Thursday to 399,000, reversing a recent decline and suggesting the labor market remains brittle. The four-week average of claims also marched higher.t
• Retail Sales in U.S. Rose Less Than Forecast Sales at U.S. retailers in December rose less than forecast, restrained by cheaper fuel prices and holiday discounting that helped hold down the value of goods sold. The 0.1 percent gain followed a 0.4 percent advance in November that was more than initia
• Street Aims Higher, Brushes Off Red Ink From Alcoa The aluminum giant’s forecast for 7% demand signals slower industry-wide growth than in the past two years.
• U.S. Stocks Drop Fears of a credit downgrade of several euro-zone countries added to disappointing results from J.P. Morgan Chase, which proved conclusively that problems in Europe are already affecting the earnings of U.S. companies.

Euro crisis updates in the economic news:

• ECB Must Prevent ‘Cataclysmic’ Euro Collapse: Fitch “It is hard to believe the euro will survive if Italy does not make it through,” he said, adding that while many saw Italy as too politically and economically important to be allowed to fail,”one might also argue that it is too big to rescue.”
• EU wants fiscal pact in force by Jan 2013 But does Europe really have an entire year to work out a foundation for better fiscal policy. A rule demanding that governments do not spend more than they earn is central to the agreement, but under the new draft that could be waived during severe downtu
• European crisis more dangerous than 2008 financial crisis: George Soros “You had the institutions that were necessary to control the situation (in 2008), a functioning central bank, the Federal Reserve system and a functioning Treasury. In the case of the euro … you don’t have an European treasury. That institution is missing
• Fitch: Italy likely to be downgraded by end of JanuaryFitch’s head of global sovereign ratings, cited the lack of a plan to halt the eurozone crisis, coupled with Italy’s high debts. Fitch warned last month that Italy and five other eurozone countries were all at risk of downgrade.
• France Announces its Credit Rating Has been Cut by S&P the ratings company was expected to also downgrade Italy and several other European countries more severely, according to two European finance officials speaking on condition of anonymity.
• French debt downgrade by S&P to cost dear: Analysts The downgrade “could generate self-fulfilling phenomena as in the case of Italy,” which was forced to push through austerity plans. Banks could be hit in a knock-on effect because they use sovereign debt as guarantees to borrow funds from the markets.
• Germany sells six-month bonds at negative yields Investors are flocking to havens to store their cash, amid continuing worries about the eurozone debt crisis. Investors are effectively willing to pay Germany for the privilege of lending to it.
• Greece debt: Merkel urges deal soon on second bailout Greece needs a second EU-IMF rescue to avoid a default on its debts and possible exclusion from the eurozone, but creditors still have not agreed on the restructuring of Greek debt
• Hedge funds play hardball over Greek debt restructuring Hedge funds are taking on the powerful IMF over its plan to slash Greece’s debt burden as time runs out. The funds have built up such powerful positions in Greek bonds that they could derail Europe’s tactic of getting bondholders to share the burden.
• Italian, Spanish bonds jump; ECB holds rate steady Italian and Spanish bonds jumped as borrowing costs slid at auctions and the European Central Bank kept its benchmark interest rate unchanged. German debt slipped
• Looming S&P downgrade hits euro zone markets with first blow of the new year S&P is poised to announce downgraded credit ratings of several euro zone countries on Friday after the NYSE closes, including France and Austria. In another potential setback, talks on a Greek debt swap with major creditors broke up without agreement
• S&P Downgrades France, Austria, Spain, Italy & Says Europe Still Missing The PointS&P said the outcome of the EU summit and other statements led them to believe the agreement did not produce a solution of sufficient size to address the eurozone’s financial problems and said European leaders remain in denial of the the real cause.
• Standard & Poor’s defends mass European downgrade Several European officials assailed the agency for its announcement of the credit rating downgrades. S&P defended its position by reiterating that Europe’s leaders aren’t doing enough to solve their debt crisis.

News of the Iranium reaction heats up and threatens the global economy:

• Deployment of thousands of U.S. troops in Israel Lt.-Gen. Frank Gorenc, commander of U.S. forces based in Germany, said there will be a deployment of several thousand American soldiers to Israel to establish American command posts in Israel and IDF command posts at EUCOM headquarters in Germany — with
• HARDBALL: Is Israel Preparing Path for War with Iran? Chris Matthews interviews two guests who suggest Israel is laying a path for war.

Other economic news headlines:

• World Economic Forum: Stark income inequality ‘top global risk’ “Severe income inequality” is the biggest global risk, according to a panel of experts assembled by the World Economic Forum. The group points to “chronic government debt” as another problem threatening the world during the next 10 years.

Solutions proposed for the Great Recession in the economic news:

• US companies begin insourcing jobs from China, Japan & Mexico; India could be next “The decision to bring these jobs back was partially motivated by economic reasons related to increasingly higher labor and logistics costs in Asia, and further, ongoing labor availability challenges especially in the coastal areas of China.”

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January 17, 2012 @ 12:01 pm

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economic news articles, euro crisis, the Great Recession