The upcoming economic collapse of US and Europe

Discussion in 'Europe and Russia' started by AkhandBharat, Jun 4, 2010.

  1. AkhandBharat

    AkhandBharat Regular Member

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    Europe's predictable collapse

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    The Soviet bloc collapsed 20 years ago, not under military attack from capitalist imperialists, but under the weight of its own economic contradictions, as Karl Marx himself might have said.

    This implosion, inevitable after two or three generations, had not been predicted by anyone save by a handful of economists with an unshakable faith in the laws of free market. Today, the same laws enable us to foresee the collapse of Europe, with the crisis of the euro as its harbinger.

    Markets are often criticized for their lack of vision—for their "short-term approach," to use the preferred stock-market jargon. But that reading requires a serious misunderstanding of what a market price is, even a speculative one—particularly, in fact, a speculative one. A price on a free market condenses all the information available, not only about the present but also the past and the future.

    In other, less sophisticated, words, let's say that those who have money—"the rich," whether good or bad—care about a much more distant future than the politicians, who are concerned about their re-election. The famous "money wall" is a wall where the future is written, not unlike Balthasar's (Daniel 5:25).

    Today, the markets anticipate not only the disastrous everyday consequences of the alleged "remedies" meant to hasten the end of the financial crisis started in the U.S. two years ago, but also and above all Europe's inability to face the global market, as it is hampered by the burden of a public debt that has made a huge leap upwards due to the aforementioned remedies.

    The "ugly speculators" have also put into their computer programs the debts generated by the pay-as-you-go pension systems, commitments which are ever larger while their funding shrinks as reform is delayed or botched. The self-destruction of the welfare state, as it results in fewer children and more unemployed, less savings and more taxes, is no less predictable after two or three generations than the failure of the Soviet system was, and whether politicians are in denial or not about it, the markets know it very well now and take it into account.

    Actually, politicians are aware that this day of reckoning is coming.

    French President Nicolas Sarkozy is rushing to the help of Greece, pushing for the establishment of an improbable European economic governance, while hastening to complete the latest pension reform, no matter the political cost in advance of the election, in order to try and prevent a humiliating deterioration of France's rating on the financial markets, which would result in an additional increase of the debt burden and a huge political slap in the face, both political and personal.

    A rearguard fight, with the back against the wall, would be an apposite description.

    Barring a miracle on the "social front" (the pensions, the labor market, health insurance), which nothing justifies expecting, and unless the "thermometer" of the rating agencies is broken, the degrading of the French state is inevitable. The current public debt is simply not sustainable.

    What applies here to France may be said for most European countries, as they are mired in the same rut.

    Major historical events usually combine chance and necessity: a spark ignites a powder keg.

    The spark was brought by the U.S. subprime crisis (another fruit of the welfare state).

    The powder kegs are the deficits accumulated over 30 years. We are living through the explosion right now, and it will bar old Europe from global competition for a long time.

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    Last edited: Jun 10, 2010
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  3. AkhandBharat

    AkhandBharat Regular Member

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    GLOBAL MARKETS: European Stocks And Euro Fall Sharply

    LONDON (Dow Jones)--European stocks fell sharply Tuesday, with commodity and oil shares leading the declines, as continuing concerns about the health of Europe's banks weighed heavily on both the equity markets and the euro, while benefiting bunds and gilts.

    Investors will be hoping June is a more positive month for equities, after May saw a spectacular drop for stocks around the world. "May proved to be a very interesting month for financial markets, punctuated by notable bouts of volatility as the sovereign crisis in Europe came to a head," said a client note by Deutsche Bank.

    "Equity markets around the world suffered heavy losses in May, with Western economy indices erasing their year-to-date gains seen through the end of April."

    However, early signs were not positive and, by 0755 GMT, the Stoxx Europe 600 index was down 1.7% at 240.83. London's FTSE 100 was 1.9% lower at 5089.04, returning from a three-day weekend. Frankfurt's DAX was down 1.7% at 5865.17 and Paris's CAC-40 declined 2.1% to 3433.10.

    Investors focused on the European bank sector after the European Central Bank board member Christian Noyer, speaking in Seoul, said responses by central banks to recent financial crises have been broadly successful. However, he warned that "steering the economy may prove more challenging and new risks can weigh negatively on the recovery underway."

    In London, BP was the biggest decliner, slumping 13% to 429.25 pence, after its 'top kill' operation on the Gulf of Mexico oil leak failed and it now embarks on a new strategy to stem the leak.

    However, Prudential rose 3.6% to 561.0 pence after AIG rejected the insurance company's revised offer for its Asian life insurance unit. The deal has largely been unpopular with Prudential's largest shareholders and so the likely collapse of the expensive acquisition deal is being viewed positively.

    Meanwhile, Asian stock markets were lower Tuesday, with some investors selling shares on hints of a slowdown in China's economy.

    Reports of a potential real-estate tax trial in China also worried the markets. However, some pared their early losses as the data were digested.

    The Shanghai Composite index was volatile but came off its lows to end 0.9% lower. Hong Kong's Hang Seng Index declined 1.4%, Japan's Nikkei Stock Average fell 0.6%, Australia's S&P/ASX 200 was 0.4% lower and South Korea's Kospi Composite was off 0.7%.

    In the European foreign exchanges, the euro was lower against the dollar and the yen in thin trading, partly weighed down by the comments from the ECB. Also, Fitch's downgrade of Spain on Friday continued to hit the currency.

    At 0820 GMT, the euro was trading at $1.2196, down from $1.2306 late in Toronto Monday, while the dollar was trading at Y90.86, down from Y91.27.

    July Nymex crude oil futures were down $1.33 at $72.64 per barrel. But spot gold was at $1220.80, up $4.15. The June bund contract was up 0.42 at 129.22 and credit market spreads opened wider.

    With the U.S. markets closed on Monday for a public holiday, European investors will be looking with interest as to how Wall Street opens, particularly in light of Spain's downgrade at the end of last week.

    The Dow Jones Industrial Average June futures contract traded down 1.0% at 10,023 and the June S&P 500 futures contract traded down 1.2% at 1075.4.
     
  4. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    Euro stocks hold onto gains ahead of data

    FXstreet.com (Barcelona) - European stocks are maintaining their strength by mid-day, borrowing overall optimism from the sharp rally on Wall Street yesterday. Currently all leading indices continue with substantial gains, with the DAX leading the group higher by 100 points or 1.65%. The FTSE 100 and CAC 40 follow suit, posting gains of 1.67% and 2.24% respectively.

    Risk appetite returned to the European session this morning, as economic fundamentals are back in focus and pointing to a relatively robust global recovery. Currently the commodity and auto industries are showing the biggest gains in Europe, getting a lift from a pair of upbeat data releases yesterday including monthly pending home sales and new vehicle sales in the US. Moreover, the monthly PMI Services reading saw an unexpected jump over the euro zone in previous hours further boosting morale. In the coming hours investors will have an eye out for key US employment data to better gage the strength of the recovery in North America.

    http://community.nasdaq.com/news/20...d-onto-gains-ahead-of-data.aspx?storyid=23539
     
  5. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    French Service Sector Activity Growth Fastest Since 2006
    6/3/2010 5:04 AM ET

    (RTTNews) - Growth momentum in the French service sector continued to build in May, data from Markit Economics showed Thursday.

    The services activity index stood at a 44-month high in May. The index came in at 61.4, up from 59.2 in April. The current sequence of rising service sector output now extends to nine months. The flash reading for May was 61.9.

    At 60.1, the Markit Composite Output Index reached a 6-month high in May. The reading for April was 59.2 and the flash composite PMI for May was 60.5. Although output growth in the manufacturing sector eased to a nine-month low, overall activity across the French private sector rose at a stronger rate during May.

    "May PMI data indicate that services has picked up the baton from manufacturing in terms of growth momentum," Jack Kennedy, economist at Markit and author of the France Services PMI, said. "Overall, the figures are consistent with a strong pace of expansion in Q2."

    http://www.rttnews.com/Content/EuropeanEconomicNews.aspx?Node=B2&Id=1323570
     
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  6. ajtr

    ajtr Veteran Member Veteran Member

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    europe will collapse not due to economy but due to demographic changes.
     
  7. Armand2REP

    Armand2REP CHINI EXPERT Veteran Member

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    EMU: Services PMI beats estimates: France leading Europe

    FXstreet.com (Barcelona) - Eurozone Services PMI rose to 56.2, up from 55.6 in April, its highest level since August 2007 and above the earlier flash estimate of 56.0. Business activity rose at fastest pace in 33 months, led by strong growth in France.

    Jobs were added in Germany for the fourth month running and at the fastest pace since July 2008. France saw an increase in employment for the first time in two years.

    Business activity rose for the ninth consecutive month in May, driven by new business. Business confidence about future activity next year time eased to a three-month low, with only France and Ireland reporting increases in business confidence in April.

    The PMI service released by the Markit Economics is an indicator of the economic situation in the Euro Zone services sector. It captures an overview of the condition of sales and employment. It is worth noting that the European service sector does not influence, either positively or negatively, the GDP as much as the PMI manufacturing does. Any reading above 50 signals expansion, which is generally bullish for the EUR, while a reading under 50 shows contraction.

    http://community.nasdaq.com/news/2010-06/emu-services-pmi-beats-estimates.aspx?storyid=23500
     
  8. AkhandBharat

    AkhandBharat Regular Member

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    You Should Be Afraid: The Coming Economic Crash

    On Sunday, August 28 2005 I sat on my porch and tried to get the attention of my clueless family: The price of gas is about to spike. A city is about to be destroyed. And a lot of people are about to die.

    Hurricane Katrina lived up to every terrible expectation. The trail of destruction was complete, and the human loss of life totally avoidable. If the US Government had believed its own reports that its own engineers had written ten years before on what the hypothetical effects of a category three hurricane passing over New Orleans would be, thousands of people would be alive today.

    They didn't believe and now people are dead because of that disturbing resistance to let scientific facts guide the actions of the powerful. They have the blood of their fellow Americans and the economic destruction of an entire region of the country on their heads. While the administration might have changed, the federal government’s complete inability to maneuver away from impending disaster has stayed the same.

    Cataclysmic portents are now being ignored in our economy. Please allow me to explain.

    Obi-Wan Kenobi famously told Luke Skywalker that "your eyes can deceive you, don't trust them." If you only drew conclusions with your eyes, the parade of new phones, new cars, new homes and new trinkets that are being bought by eager consumers would be enough to convince you that everything was peaceful in our economic kingdom.

    If everyone knew how fragile the world economic order was, they would feel less at ease. I happen to work in an environment where I can listen to the thoughts of people who have been in the financial game for a very long time. I have never seen these normally unflappable people so worried.

    Consider:

    - The average European bank has less than seven cents in capital for every dollar that they have lent out to the market. This ratio has gotten worse, not better, since the sub-prime crash of 2008.
    - Every country in the Euro zone is expecting a decline in the amount of workers in the labor market every year for the next thirty years. It is very difficult to grow your economy if your population is shrinking this drastically, let alone to grow at a pace where your debt would be easier to service when you have fewer people paying taxes.
    - Health care, pensions, and debt servicing requirements are growing by over 10% a year in Europe. The average European economy is growing at less than 2% this year.
    - Every major banking country in the world has lent hundreds of billions of dollars to European governments.
    - Consumer demand around the industrialized world is set to be curtailed because consumers will have less money to spend on goods and services. The price of oil, gas, metal, wood, water, plastic is projected to increase by double digits every year for the next twenty years – the fruits of unlimited population growth in the developing world.
    - Stocks are so comically over-valued that they no longer bare any resemblance to earnings.
    The hysterical fear in the eyes of the financial elite when Greece looked like they would no longer be able to pay even the interest on their debt should tell you everything you need to know about the fragility of this global economic rigmarole. I get knowing smiles from powerful men and women in the financial industry who understood that things have gotten too large, too out-of-control, too messy to be fixed now.


    I don’t know what our society is going to look like after the waters recede. All I know is that the storm is coming.

    http://www.dailykos.com/story/2010/6/4/071/57304
     
    Last edited: Jun 4, 2010
  9. AkhandBharat

    AkhandBharat Regular Member

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    Stock prices dropped in early trading after the Labor Department reported disappointing news on unemployment and the Hungarian government generated new worries about Europe's economy.

    The Dow Jones industrial average fell more than 200 points immediately after opening, and dipped below 10,000 briefly at midday. The drop erased most of the gains that have been made over the last two days of growth in the markets.

    The Labor Department announced that unemployment had fallen to 9.7% in May but that most of the job gains came from temporary Census Bureau positions. The broader economy saw an increase of 41,000 jobs, fewer than analysts expected.

    "The fact that the unemployment rate fell and private employment rose are obviously encouraging signs that recovery continues," Christina Romer, the chair of the White House Council of Economic Advisors, wrote in a blog post Friday morning. "At the same time, the continued high level of unemployment and the slowdown in private-sector job growth emphasize the need for continuing vigilance."

    European stocks also fell in the middle of the day after the Hungarian government spoke out about its economic problems, raising concerns that the debt problems of Greece and Spain may not be quarantined. Leading indexes were down 3.8% in Spain and 2.9% in France.

    The euro was trading at $1.19, its lowest price in four years.

    The Standard and Poor's 500 index was down 24.66, or 2.24%, to 1078.12. The Nasdaq composite index dropped 46.68 or 2.03% to 2256.39.
     
  10. AkhandBharat

    AkhandBharat Regular Member

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    European trade unions: austerity is going too far

    BRUSSELS – European government budget cuts to combat the region's debt crisis are going too far and could trigger an economic depression, trade unions warned Friday.

    The head of the European Trade Union Confederation, John Monks, said there was "quite a bit of social unrest in some countries" over harsh reductions in state spending, which include cuts to public sector salaries, pensions and benefits.

    Workers are planning protests and possibly work stoppages across the European Union on Sept. 29, when EU finance ministers will hold a meeting.

    Almost all 27 EU nations are trying to curb spending and reduce debt to contain a financial crisis that threatens Europe's currency union and has sent stocks — and the euro — sliding in recent weeks.
    Monks expressed his fears after attending a meeting between workers' representatives, Europe's major employer federation and EU Commission President Jose Manuel Barroso.

    He said he'd asked for the talks "out of despair and alarm at the prospects for growth in Europe as all countries, not just those in distress, move to cut their budgets, move to reduce public expenditure."

    "We're seeing cut, cut, cut in all the countries simultaneously which is what they did in 1931 and that caused the Great Depression," he told the Associated Press. "The cost will be in jobs, the cost will be in pay levels for people in the public services in particular, and pensions."

    In Germany, Europe's largest economy, cabinet ministers will Sunday and Monday thrash out plans to save billions of euros over the coming years.

    Chancellor Angela Merkel's spokesman Ulrich Wilhelm argued Friday that belt-tightening was necessary because the number of young people entering the work force will shrink in the decades ahead, reducing future sources of government revenue.

    The austerity push comes as unemployment in the 16 nations that use the euro hit a ten-year high of 10.1 percent in April. Europe has pulled out of recession, but the slow recovery makes it unlikely that companies will start hiring in great numbers in the near future.

    Greece's budget cuts, which it was forced to accept in return for a euro110 million ($134.95 million) rescue package from the European Union and the International Monetary Fund to save it from bankruptcy, are excessive, Monks said.

    "Spain and Portugal, if they do apply for the euro rescue fund, the terms there are as bad as they are for Greece. They're too tough, too hard," he said.

    "They would be helped if the stronger economies had a greater emphasis on growth but if they're all cutting at the same time — which is the prospect now in Europe: Italy, Britain, Germany have all declared and France is thinking about it — if they all do it, the prospects for some of the smaller economies are grim," he said.

    The EU's Barroso stressed that governments could not abandon current efforts to reduce swelling debt and deficit because there is now "an emergency situation from a financial point of view."
    "Only if we are serious about getting our house in order, only if we really do our best to work for a sustainable future, will we be able to re-establish confidence in our economy and growth," he told reporters.

    Failing to combat debt would make it hard to maintain Europe's expensive state welfare and health programs in the long-term, he warned.
    "Without determination to act now we put our European model of society at risk," he said.
    Monks said he did not yet know how many unions or workers would join the protest day in September, which will center on a demonstration in Brussels outside a meeting of EU finance ministers and call on them to prioritize economic growth ahead of budget cuts.

    Bernard Thibault, the head of France's main union federation CGT, said French, Italian, German, Spanish, Belgian, Romanian workers' groups had already launched protests against "a similar political logic" of less public spending, lower welfare and pension benefits and higher retirement ages.
    "Austerity is dangerous," he told the AP. "It provokes exclusion, it can be suicide for economic productivity."

    Philippe de Buck of BusinessEurope, which represents some 20 million companies in the region, said widespread protests were irresponsible and could harm the economic recovery.
    "The last thing we need is continuous social unrest because this is a way also to undermine confidence," he said. "What would be a big mistake is to make the companies the victims of stoppages and social unrest at the moment we are in a full recovery."

    http://news.yahoo.com/s/ap/20100604/ap_on_bi_ge/eu_europe_financial_crisis;_ylt=Ar3vTV6Z2dU1kq_iKgjNuplA869_;_ylu=X3oDMTMwcDlrOG44BGFzc2V0A2FwLzIwMTAwNjA0L2V1X2V1cm9wZV9maW5hbmNpYWxfY3Jpc2lzBHBvcwM2BHNlYwN5bl9wYWdpbmF0ZV9zdW1tYXJ5X2xpc3QEc2xrA2V1cm9wZWFudHJhZA--
     
  11. SHASH2K2

    SHASH2K2 New Member

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    If Europe collapse biggest loser will be chinese as its biggest export market for China.

    ==bump
     
    Last edited: Jun 4, 2010
  12. AkhandBharat

    AkhandBharat Regular Member

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    Official says Hungary's economy 'grave'

    BUDAPEST, Hungary – The spokesman for Hungary's prime minister says the country's economy is in a "grave" situation but that the government is ready to avoid a crisis like the one being faced by Greece.

    Peter Szijjarto says that a fact-finding panel will present a preliminary report on the state of the economy likely during the weekend, to be followed within 72 hours by a government action plan.

    Szijjarto says in comments made Friday that despite the crisis, the center-right Fidesz government, which won a landslide in April's elections, plans to keep its campaign promise and implement tax cuts.

    Hungary received a bailout of 20 billion euros (billion) from the International Monetary Fund and other late in 2008 to help it avoid a default on its loans.

    http://news.yahoo.com/s/ap/20100604/ap_on_bi_ge/eu_hungary_financial_crisis;_ylt=Ajj6vwYVj2m.JrGGYEPyz4VA869_;_ylu=X3oDMTMxc3JmdXBsBGFzc2V0A2FwLzIwMTAwNjA0L2V1X2h1bmdhcnlfZmluYW5jaWFsX2NyaXNpcwRwb3MDNARzZWMDeW5fcGFnaW5hdGVfc3VtbWFyeV9saXN0BHNsawNvZmZpY2lhbHNheXM-
     
  13. AkhandBharat

    AkhandBharat Regular Member

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    Europe posts weak growth amid public spend squeeze

    Europe posted feeble economic growth figures on Friday, well short of US and Japanese rivals and with analysts offering little optimism going forward amid a public spending squeeze.

    The EU released data showing that seasonally-adjusted gross domestic product for the debt-laden eurozone grew by just 0.2 percent in the first quarter of 2010, an increase of 0.6 percent compared to the same period in 2009.

    Growth across the 27-nation European Union as a whole, which also includes Britain and Poland, was also pegged at 0.2 percent between January and March, significantly short of major rivals.
    The United States recorded 0.8 percent growth in the first quarter, while Japan powered ahead with 1.2 percent growth.

    Worse, in the eyes of the experts, was detailed data showing that household spending and investments in the eurozone both beat a retreat.
    "Private consumption fell 0.1 percent," said Moilan-based Marco Valli of Unicredit, "mostly due to the drag coming from auto sales after the phasing out of several scrapping" schemes especially in France and Italy.

    "With car sales seen weakening further and consumer confidence starting to take a hit from fiscal austerity announcements, consumption prospects for the second quarter are not going to improve much," he underlined.

    "Fiscal tightening in several eurozone countries and the ongoing difficulties in labour markets will strain domestic demand," echoed Paris-based Clemente De Lucia of BNP Paribas.
    "Over the coming quarters, therefore, exports will be the main engine of growth."
    Exports rose by 2.5 percent in the eurozone over the first quarter, but imports jumped by 4.0 percent quarter-on-quarter.

    "Data and survey evidence for the second quarter have been appreciably firmer overall, indicating that the eurozone should see significantly improved growth," said London-based IHS Global Insight analyst Howard Archer.

    Forecasting expansion of 0.6 percent for the present three-month period, he nevertheless acknowledged that "more aggressive tightening of fiscal policy in a number of countries is starting to weigh down on economic activity."

    The breakdown of national figures last month had shown that, of the major eurozone countries, Italy posted the fastest growth, at 0.5 percent, Germany was in line with the average and both France and Spain lagged narrowly behind.

    Crisis-hit Greece's economy shrank by 0.8 percent and that of Estonia, due to enter the eurozone next year, contracting by 2.3 percent on a non-seasonally adjusted basis.
    Data for the final quarter of 2009 was amended to show 0.1-percent growth having previously been reported as flatlined.

    http://news.yahoo.com/s/afp/20100604/bs_afp/eueurozoneeconomygrowth;_ylt=AksuKtCqO95Eu6Ysh730GzlA869_;_ylu=X3oDMTJ2bGR1djZ2BGFzc2V0A2FmcC8yMDEwMDYwNC9ldWV1cm96b25lZWNvbm9teWdyb3d0aARwb3MDMTAEc2VjA3luX3BhZ2luYXRlX3N1bW1hcnlfbGlzdARzbGsDZXVyb3BlcG9zdHN3
     
  14. AkhandBharat

    AkhandBharat Regular Member

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    G20 policymakers candid about world economic risks

    BUSAN, South Korea (Reuters) –

    Leading policymakers spoke with unusual frankness on Friday of their fears that the euro zone's financial and banking woes could derail the global economic recovery.

    The troubles of Greece and other heavily indebted European governments dominated conversations among finance ministers of the Group of 20 leading economies meeting in the southern port city of Busan, officials said.


    "It is essential to ensure continued recovery that Europe fix its banks. It is essential that certain vulnerable European nations follow through with major fiscal consolidation, and get the job done," Canadian Finance Minister Jim Flaherty told reporters.
    Gatherings such as the G20 are typically a stage for ministers to radiate confidence, especially when financial markets are in a nervous state, as they are now.
    But Flaherty was not alone in his warnings.

    "We can't afford to be complacent," South Korean Finance Minister Yoon Jeung-hyun told the opening session.
    "Without further and ongoing action from us, the recovery may not remain on track and we may not be able to achieve strong, sustainable and balanced growth," he said.


    South African Planning Minister Trevor Manuel said he could not think of a more challenging time than the present for the Group of 20, which includes major emerging economies as well as the richest industrial nations. Decisions needed taking, he said, to banish the specter of a double-dip recession.
    "It's important that we all understand just how fragile the recovery is," Manuel, himself a former finance minister, said.


    As ministers got down to work, police boats patrolled near the beach hotel where they are meeting. Authorities have steeped up security in response to war-like rhetoric on the divided peninsula after the South accused North Korea of sinking one of its warships.

    BALANCING ACT
    French Finance Minister Christine Lagarde said the trick for the G20 was to staunch red ink in their public finances without squeezing the life out of the nascent recovery.
    "We spoke a lot about growth and the compatibility of this growth with necessary budgetary consolidation, especially in developed countries and not only in Europe," she told reporters.
    Washington is pressing Germany, whose deficit is relatively modest by EU standards, not to undermine aggregate demand in the euro zone by ending its pro-growth policies prematurely.
    But a senior German official said Finance Minister Wolfgang Schaeuble would announce that Berlin, under pressure from fiscally conservative voters to cut its deficit, would start unwinding its anti-crisis stimulus outlays from 2011.
    The debate over how quickly to rein in deficit spending has gained urgency since the 16-nation euro zone agreed to a 110 billion euro rescue for Greece after Athens lost the confidence of bond markets and was unable to roll over its vast debts.

    The euro zone, working with the International Monetary Fund, is also putting together a 750 billion euro ($910 billion) safety net for other member countries with big debts in case they too fail to find buyers for their bonds. A forced debt restructuring would inflict heavy losses on euro zone banks.
    Investors first responded enthusiastically to the May rescue package, but the euro has since slumped to a four-year low against the dollar on doubts about the capacity of euro zone states to plug holes in their budgets.


    World stock markets have shuddered at the prospect that Europe's difficulties could derail a recovery from the deepest financial crisis since the 1930s.
    But U.S. Treasury Secretary Timothy Geithner sounded a more optimistic note.
    "The world economy came into this period of concern about Europe with stronger underlying momentum and growth than many people expected, and we're in a much stronger position to get through this," Geithner told CNBC television en route to Busan.

    BANKING STALEMATE
    On the other main item on the Busan agenda, how to reform global banks to reduce the risk of another crisis, Canada's Flaherty said tough new global capital rules would be phased in over a longer time than originally planned.
    In a sign that intense lobbying by banks for more time is paying off, Flaherty said: "Implementation is a variable. Some would like a shorter period, some would like a longer period. I think that can be worked out over time."

    A related proposal for a global levy on banks to pay for any future bailout was foundering on fierce opposition from Canada, among others.
    Instead, ministers will work on a menu of options for their political leaders to endorse at a summit in Toronto at the end of the month. If all goes according to plan, they would then make more specific commitments at another summit in Seoul in November.
    "Different countries' banking sectors are in different situations. So there won't be a one-size-fits-all policy," said Sakong Il, a senior South Korean official.

    http://news.yahoo.com/s/nm/20100604/bs_nm/us_g20;_ylt=All7HB3WcPRMFBOF43ulkQhA869_;_ylu=X3oDMTJkZ3YwdHE1BGFzc2V0A25tLzIwMTAwNjA0L3VzX2cyMARwb3MDMjEEc2VjA3luX3BhZ2luYXRlX3N1bW1hcnlfbGlzdARzbGsDZzIwcG9saWN5bWFr
     
  15. AkhandBharat

    AkhandBharat Regular Member

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    European stocks fall on growth fears

    By NATALIYA VASILYEVA (AP) – 8 hours ago

    European stocks fell Tuesday amid worries that the debt crisis and tough spending cuts will cause the financial downturn to linger longer than expected.

    Britain's FTSE 100 closed down 1.0 percent at 5,020.91 points, while Germany's DAX 20 dropped 0.9 percent to 5,852.93 and France's CAC-40 lost 1.1 percent to 3,377.58. The euro rose to $1.1986 from near $1.1900 earlier.

    European Union nations committed Tuesday to cutting debt by reducing government spending and agreed to tighten controls of each others' public finances.

    EU economy chief Olli Rehn also said he had "some concerns" about Bulgaria's public finance statistics and urged EU officials to check on them. Meanwhile, Hungary proposed a new fiscal plan to convince markets that it can handle its debt.

    Along with earlier announcements of spending cuts from big countries like Germany and Britain, Tuesday's news suggest the debt crisis will drag on the European economy for a long while yet.
    "In a week where there is no obvious source of good news, things may once again end up worse than many thought," Daragh Maher from Credit Agricole said in a morning note to investors.

    To further fray investors' nerves, Fitch Ratings agency warned that Britain faces a "formidable" fiscal challenge and must cut its budget deficit faster than earlier planned.
    The country's rise in public debt ratios since 2008 is faster than any other AAA-rated country, the agency said.


    Despite the gloom in Europe, Wall Street made some gains on the open, as investors there focused on Federal Reserve Chairman Ben Bernanke's reassuring comments about the recovery. He said he does not expect the U.S. economy to fall back into a "double dip" recession.

    The Dow Jones benchmark was up by 0.4 percent at 9,859.87 while the broader Standard & Poors 500 advanced by 0.2 percent to 1,052.74.

    The U.S. economy grew at a 3 percent pace in the first quarter of this year. But coming out of such a deep recession, the economy must grow much more strongly to make a dent in the high unemployment rate.

    Earlier in Asia, indexes closed mostly higher, with Japan's Nikkei 225 stock ending the day up 0.2 percent following a nearly 4 percent plunge Monday. Exporters benefited after the euro recovered slightly from an 8 1/2-year low against the yen Monday.

    Hong Kong's Hang Seng edged up 0.6 percent and Australia's ASX/S&P 200 climbed 1.3 percent.
    Benchmarks in mainland China, South Korea, and Singapore also advanced. Shares in Taiwan and New Zealand, where the market was closed Monday for a holiday, were in negative territory.

    Asian stocks were supported by Bernanke's remarks Monday night, and an advance of the euro.
    "Confidence has not yet returned, but I think fear has subsided," said Francis Lun, general manager of Fulbright Securities in Hong Kong. "I think Asian markets have recovered from the shock of the European crisis, so investors started buying again."

    Trading for July delivery of benchmark crude has been mixed throughout the morning and early afternoon in Europe. By late afternoon in Europe, light crude oil contracts were up 61 cents to $72.05 a barrel in electronic trading on the New York Mercantile Exchange. The contract lost 7 cents to settle at $71.44 on Monday.

    Associated Press Writer Pamela Sampson contributed to this report from Bangkok.
     
  16. AkhandBharat

    AkhandBharat Regular Member

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    Analysis: France, Germany still out of synch on euro

    (Reuters) - You don't have to be Einstein, or Hercule Poirot, to work out that there was more behind the last-minute cancellation of Monday's Franco-German summit than a little scheduling problem.

    True, Chancellor Angela Merkel had just wrapped up a 36-hour marathon coalition negotiation on budget cuts when President Nicolas Sarkozy's visit to Berlin was postponed by one week.

    But the underlying problem is that Germany and France, the founders and driving forces behind the single European currency, do not see eye-to-eye on the future of the euro zone, nine days before a crucial European Union summit on the issue.

    Behind the scenes, what the French call the "Franco-German couple" are having one of their periodic tantrums. So much so that they cannot even agree who called the meeting off. A French statement said it was Merkel. A German government official said: "It was the French side that canceled, not the Germans."

    Berlin sees budget discipline as the central priority and is pressing Paris to follow its hair-shirted example and implement tougher austerity measures.

    The German Finance Ministry has circulated a 9-point plan demanding stiffer sanctions against governments that flout European fiscal rules, including suspending repeat offenders' EU voting rights, and an insolvency procedure for states.

    Despite a deficit expected to hit 8 percent of national output this year, Sarkozy refuses to let his government utter the R-word: "rigueur," the French term for austerity.

    Facing a tough battle for re-election in 2012 and protests against a planned pension reform, he has so far refused to go beyond a three-year freeze on public spending at current levels.

    France's top priority is to create an "economic government" for the euro zone, with regular summits of the 16 leaders and a dedicated secretariat, to coordinate economic policy and focus on rebalancing the European economy and boosting growth.

    "It's clear there is a tug of war," said Jean Pisani-Ferry, director of the Bruegel economic think-tank in Brussels.

    While the French were comfortable with committing billions in taxpayers' money on "solidarity" with euro zone partners in financial trouble, "the Germans were traumatized by having to bail out Greece and rescue the euro zone.

    "Now they want stricter rules to prevent any repetition of the Greek crisis, and an insolvency procedure for states to make a managed default possible," he said.

    France is unwilling to envisage any debt restructuring in the euro zone, fearing panic in the financial markets, knock-on problems for its own banks and wider risks to the euro.

    LOST FAITH?

    Former French Prime Minister Dominique de Villepin said there was a clear divergence in at least three areas -- the economic model, with Germany looking more to Asia and the east; the need for budgetary rigor, with Germany immediately tightening its belt; and the broader vision of Europe.

    "Germany has lost its faith in France. Germany sees France handing out lessons without applying the basic rules of good management," Villepin, a personal foe and potential conservative challenger to Sarkozy, told Europe 1 radio.

    German officials privately fret that the French "still don't get it" about the need for austerity at home. Some of the public pressure Berlin has applied to Greece, Spain and Portugal was meant to shock Paris into savings measures, they say.

    Joachim Pfeiffer, economic policy spokesman for Merkel's conservative bloc in the lower house of parliament, said the subject of how improved euro zone coordination might work was at the heart of ongoing discussions with the French.

    Germany has hitherto resisted calls for an "economic government" out of fear that France's agenda was to promote a Keynesian state-led economic expansion policy, force a softer euro exchange rate and exert pressure on the European Central Bank to keep interest rates low.

    "In the past we were certainly skeptical and cautious on this. Now with the rescue package and other things, there is a chance to bring some momentum into the European process," Pfeiffer told Reuters.

    "That means there could and should be greater coordination and consultation. But this doesn't mean there should be a bureaucratization or even some kind of planned economy as has been envisaged (by the French)," he told Reuters.

    It was still unclear if a secretariat would be responsible for the 16 euro states or the 27 EU members, he said, adding the structure and tasks of such a body were also still open.

    Patrick Devedjian, the minister in charge of France's fiscal stimulus program, denied there were serious problems between the two states, saying they were simply debating the best course and blaming some of the delay on internal divisions in Germany.

    "We have discussions, which is normal because we don't always have the same approach. The German government is a coalition and they themselves, inside that government, have discussions," Devedjian told France 2 television.

    http://www.reuters.com/article/idUSTRE6573BU20100608
     
  17. AkhandBharat

    AkhandBharat Regular Member

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    Tax Hikes and the 2011 Economic Collapse

    By ARTHUR LAFFER

    People can change the volume, the location and the composition of their income, and they can do so in response to changes in government policies.

    It shouldn't surprise anyone that the nine states without an income tax are growing far faster and attracting more people than are the nine states with the highest income tax rates. People and businesses change the location of income based on incentives.

    John Fund of WSJ's Political Diary breaks down Tuesday's most interesting primary contests. Also, WSJ Columnist Mary Anastasia O'Grady translates the latest economic signals from Washington.

    Likewise, who is gobsmacked when they are told that the two wealthiest Americans—Bill Gates and Warren Buffett—hold the bulk of their wealth in the nontaxed form of unrealized capital gains? The composition of wealth also responds to incentives. And it's also simple enough for most people to understand that if the government taxes people who work and pays people not to work, fewer people will work. Incentives matter.

    People can also change the timing of when they earn and receive their income in response to government policies. According to a 2004 U.S. Treasury report, "high income taxpayers accelerated the receipt of wages and year-end bonuses from 1993 to 1992—over $15 billion—in order to avoid the effects of the anticipated increase in the top rate from 31% to 39.6%. At the end of 1993, taxpayers shifted wages and bonuses yet again to avoid the increase in Medicare taxes that went into effect beginning 1994."

    Just remember what happened to auto sales when the cash for clunkers program ended. Or how about new housing sales when the $8,000 tax credit ended? It isn't rocket surgery, as the Ivy League professor said.

    On or about Jan. 1, 2011, federal, state and local tax rates are scheduled to rise quite sharply. President George W. Bush's tax cuts expire on that date, meaning that the highest federal personal income tax rate will go 39.6% from 35%, the highest federal dividend tax rate pops up to 39.6% from 15%, the capital gains tax rate to 20% from 15%, and the estate tax rate to 55% from zero. Lots and lots of other changes will also occur as a result of the sunset provision in the Bush tax cuts.

    Tax rates have been and will be raised on income earned from off-shore investments. Payroll taxes are already scheduled to rise in 2013 and the Alternative Minimum Tax (AMT) will be digging deeper and deeper into middle-income taxpayers. And there's always the celebrated tax increase on Cadillac health care plans. State and local tax rates are also going up in 2011 as they did in 2010. Tax rate increases next year are everywhere.

    Now, if people know tax rates will be higher next year than they are this year, what will those people do this year? They will shift production and income out of next year into this year to the extent possible. As a result, income this year has already been inflated above where it otherwise should be and next year, 2011, income will be lower than it otherwise should be.

    Also, the prospect of rising prices, higher interest rates and more regulations next year will further entice demand and supply to be shifted from 2011 into 2010. In my view, this shift of income and demand is a major reason that the economy in 2010 has appeared as strong as it has. When we pass the tax boundary of Jan. 1, 2011, my best guess is that the train goes off the tracks and we get our worst nightmare of a severe "double dip" recession.

    In 1981, Ronald Reagan—with bipartisan support—began the first phase in a series of tax cuts passed under the Economic Recovery Tax Act (ERTA), whereby the bulk of the tax cuts didn't take effect until Jan. 1, 1983. Reagan's delayed tax cuts were the mirror image of President Barack Obama's delayed tax rate increases. For 1981 and 1982 people deferred so much economic activity that real GDP was basically flat (i.e., no growth), and the unemployment rate rose to well over 10%.

    But at the tax boundary of Jan. 1, 1983 the economy took off like a rocket, with average real growth reaching 7.5% in 1983 and 5.5% in 1984. It has always amazed me how tax cuts don't work until they take effect. Mr. Obama's experience with deferred tax rate increases will be the reverse. The economy will collapse in 2011.

    Consider corporate profits as a share of GDP. Today, corporate profits as a share of GDP are way too high given the state of the U.S. economy. These high profits reflect the shift in income into 2010 from 2011. These profits will tumble in 2011, preceded most likely by the stock market.

    In 2010, without any prepayment penalties, people can cash in their Individual Retirement Accounts (IRAs), Keough deferred income accounts and 401(k) deferred income accounts. After paying their taxes, these deferred income accounts can be rolled into Roth IRAs that provide after-tax income to their owners into the future. Given what's going to happen to tax rates, this conversion seems like a no-brainer.

    The result will be a crash in tax receipts once the surge is past. If you thought deficits and unemployment have been bad lately, you ain't seen nothing yet.

    WSJ: Tax Hikes and the 2011 Economic Collapse
     
  18. AkhandBharat

    AkhandBharat Regular Member

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    ECONOMIC COLLAPSE 2010 predicted by Peter Schiff

    ECONOMIC COLLAPSE 2010 predicted by Peter Schiff

     
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  19. AkhandBharat

    AkhandBharat Regular Member

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    Marc Faber - America Is Still "Doomed"

    Marc Faber - America Is Still "Doomed"

     
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  20. AkhandBharat

    AkhandBharat Regular Member

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    Marc Faber on US Bubble, 'worthless' dollar & Gold 'the Savior'

    Marc Faber on US Bubble, 'worthless' dollar & Gold 'the Savior'

     
    Last edited by a moderator: May 10, 2015
  21. AkhandBharat

    AkhandBharat Regular Member

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    Marc Faber: US govt will go bankrupt

    Marc Faber: US govt will go bankrupt

     
    Last edited by a moderator: May 10, 2015

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