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Euro crisis and global downturn
Two latest forecasts, one by the UN and another by the IMF, warn of the threat of global downturn and recession in both 2012 and 2013. Unlike the IMF estimates of 3.3 per cent, the UN forecasts show that the growth will be 2.6 per cent only in the current year 2012. The previous forecasts of UN and the IMF for this year were 3.6 and 3.9 per cent respectively. Both predict growth in developed capitalist countries will be 1.2 to 1.3 per cent only amidst very high unemployment and extreme income inequality. They also reveal that countries like China and India will now face economic slow down which have been the locomotive of the global economy, especially since the financial crisis of 2008. These projections, however, do not assess the likely severe adverse effect of steep rise in the prices of petroleum products recently due to increased tensions in the Iranian Peninsula.
Nonetheless, there is broad consensus that despite abrupt withdrawal of fiscal stimulus and bail-outs playing some role in dampening the growth, the major culprit has been the Read more…
The United States Only Has $54 Billion Of Cash Left In The Bank
Um, John, we’re about to go broke. What say we call off the circus act and finally do something about it?
Image: AP Photo/Harry Hamburg
Maybe this news will wake up those irresponsible idiots in Washington.The United States only has $54 billion of cash left in the bank.
That’s down from $100+ billion only eight days ago.
In the middle of last week came the shocking news that Apple, Inc., had more cash than the United States. Now, Apple has a lot more cash than the United States.
By early next week, if Congress can’t get its act together, the United States will have less cash than Google. Then Salesforce.com. Then, eventually, Pets.com.
Maybe, instead of preening in front of TV cameras, Congress folks should just hit the streets of Washington with hats in hand this weekend. If all 535 members spend all weekend out on the Mall, we might scrape together enough cash to last a few more hours. And these efforts will certainly Read more…
What happens if the U.S. defaults?
Blank U.S. Treasury cheques are run through a printer at the U.S. Treasury printing facility July 18 in Philadelphia.The first payments that stand to be affected if the U.S. government defaults on Aug. 2 would be some $23 billion US in Social Security benefit cheques. (William Thomas Cain/Getty)How a default would unfold immediately appears relatively straightforward. It’s the reaction that no one can predict, because it’s never happened before.
The first move will be made by the U.S. Federal Reserve. The Fed is the Treasury Department’s bank, handling government cheques and lending to banks which borrow using U.S. Treasury debt as collateral.
One day — the U.S. government has estimated it will be Aug. 2 — the Fed will serve notice on the government that its account at the Fed will be in overdraft by the end of the day, in violation of the Federal Reserve Act.
On Aug. 3, some Read more…
Gold rises as U.S. debt impasse continues
TOKYO (MarketWatch) — Gold futures continued to rise Wednesday as a prolonged standoff in Washington over hiking the U.S. debt ceiling continued.
Gold for August delivery /quotes/zigman/700181 GC1Q +0.42% , the contract with the most volume, rose $5.30, or 0.3% to $1,622.00 an ounce in electronic trading.
The December contract /quotes/zigman/661658 GC1Z +0.41% , which has the most open interest, was at $1,623.90 an ounce, up $4.50, or 0.3%, after earlier rising to a fresh peak of $1,626.90.
On Tuesday, August gold added $4.60, or 0.3%, to end at $1,616.80 an ounce on the Comex division of the New York Mercantile Exchange. The December gold contract added Read more…
A visualization of the US Debt
Silver shines bright, to climb steadily in second half
SINGAPORE/MUMBAI: Silver prices, deeply dented but unbroken by a rout in May, will climb steadily through the second half of the year as investors buy the metal as an alternative to expensive gold.
Despite a swoon following a 60 percent rally to a peak in April, silver continues to lead the precious metals complex with a gain of 24 percent so far this year, outstripping gold’s rise of 11 percent, and retains allure for inflation-wary investors.
Silver , notorious for its price volatility, stung many investors with a drop of 33 percent over six sessions in early May from a record of $49.51 an ounce on April 28.
Silver prices have held above $32 since mid-May, and are set to move higher in Read more…
China official: GOP ‘playing with fire’ with debt ceiling
There’s been an interesting warning on the debt ceiling today — from China.
Li Daokui, an adviser to the People’s Bank of China, told reporters in Beijing, “I think there is a risk that the U.S. debt default may happen.” And he puts the blame on congressional Republicans. “The result will be very serious and I really hope that they would stop playing with fire,” he said.
China is no disinterested party: It holds more than $1 trillion in Treasury debt as of March.
President Obama may well agree with the Chinese banker’s sentiment, as he urges Congress to go ahead and raise the nation’s $14.3 trillion debt ceiling.
Technically, U.S. obligations have already risen past that ceiling, but the Treasury Department says it can use accounting maneuvers to keep paying bills until Aug. 2.
Congressional Republicans, including those who control the U.S. House, say they won’t agree to a debt ceiling increase unless the White House and Democrats agree to major spending cuts.
The two sides are negotiating — as the world waits.
“I really worry about the risks of a U.S. debt default, which I think may lead to a decline in the dollar’s value,” Li said.
Timeline: Greece’s debt crisis
Here is a timeline of economic events in Greece since 2010:
Jan 2010 – Greece unveils stability program on Jan 14, saying it will aim to cut its budget gap to 2.8 percent of GDP in 2012 from 12.7 percent in 2009.
Feb – Greece must refinance 54 billion euros ($66.6 billion) of debt, with a crunch in Q2 as more than 20 billion euros becomes due and market yields for Greek debt soar.
March 5 – Package of public sector pay cuts and tax increases is passed to save an extra 4.8 billion euros. VAT to rise 2 percentage points to 21 percent; state-funded pensions frozen in 2010.
April 11 — Euro zone finance ministers approve 30 billion euros ($40.67 billion) emergency aid mechanism for Greece.
April 15 – Greek parliament passes law that seeks to tackle tax evasion and shift tax burden to higher earners.
April 22 – Eurostat says Greece’s 2009 budget deficit is 13.6 percent of GDP, not 12.7 percent as reported earlier.
April 23 – Prime Minister George Papandreou asks for activation of an EU/IMF aid package. Read more…
Setbacks in Portugal and Ireland Renew Worry on Debt Crisis
Allied Irish Bank is one of several prominent financial institutions in Ireland in need of a rescue.
LONDON — A higher-than-expected budget deficit in Portugal and the need for more money to rescue Ireland’s failing banks have renewed fears that Europe’s debt crisis is worsening despite its sizable bailout fund.
Officials in Lisbon said Thursday that the country’s budget deficit last year was 8.6 percent of its gross domestic product, well above the goal of 7.3 percent. Although officials said the revision would not affect the government’s goal of reaching a deficit of 4.6 percent of domestic product in 2011, the news was a reminder that, even after the problems from Greece’s fraudulent deficit statistics, some numbers from the euro zone remain unreliable.
Also Thursday, Ireland’s central bank announced that four of the country’s most prominent financial institutions would need an additional 24 billion euros to cover sour real estate loans, a move that pushes the Read more…
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