Tagged: US Bankers are Looters

US growth rate revised downwards

BBC NEWS | 2009/12/22 | 22:00:40 GMT

The US economy grew by less than originally estimated between July and September, official figures show. The latest estimate said the economy grew at an annual pace of 2.2%, down from the previous estimate of 2.8%. The first reading had shown growth of 3.5%. It is the first quarter in which the US economy returned to growth, after four quarters of decline. Separately, a report showed new home sales rose 7.4% in November, spurred on by government incentives. The National Association of Realtors said sales rose to an annual rate of 6.5 million – the highest level in more than two years.

“This clearly is a rush of first-time buyers not wanting to miss out on the tax credit, but there are many more potential buyers who can enter the market in the months ahead,” said the National Association of Realtors’ chief economist Lawrence Yun. The original deadline for the US government’s tax credits was 30 November. It was later extended. Mr. Yun said: “We expect a temporary sales drop while buying activity      Continue reading

Recovery or Bubble?

C.P. Chandrasekhar | MRzine.org | 06.12.2009

Fears of a new speculative boom on which the global recovery rides are being expressed in different circles. There are as many aspects to these fears as there are to the so-called recovery, which include the huge profits being recorded by some major banking firms, the surge in capital flows to emerging markets, the speculative rise in stock markets’ values worldwide and the property boom in much of Asia. Potential victims of the reversal of this boom, however, now complain that the source of it all is a return in the US to a policy of easy money — involving huge liquidity infusions and extremely low interest rates — to save the financial system and real economy from collapse, while resorting to a fiscal stimulus to trigger a recovery. A similar policy was and is being adopted by many other countries, even if not with the same intensity in all cases, but the US, which was home to the most toxic assets and damaged banks, led by a long margin.

This policy did generate the signals that suggested that economies were on the mend. But these are also signs; argue some, of a bubble similar to the one which generated the high profits and the credit-financed housing and consumer-spending boom that preceded the 2008 downturn. That dangers associated with that bubble were ignored because of the short-run growth benefits it delivered. This one could be ignored because of the impression of a recovery it generates. Even as satisfaction is being expressed in some quarters about the recovery, however halting, fears of a second downturn or double dip recession are being expressed in other circles. Thus, just before the US President Barack Obama arrived in Beijing on his much-publicised visit to China, that country’s banking regulator, Liu Mingkang, criticised the US Federal      Continue reading

US unemployment rate eases to 10%

BBC NEWS | 2009/12/04 22:38:38 GMT

The US unemployment rate fell in November to 10% from 10.2% in October, Labor Department figures show. Employers in November cut the lowest number of jobs since the recession began in December 2007. In all, 11,000 jobs went over the month. That was far fewer than the 130,000 expected by most analysts. President Barack Obama said the figures were “good news”, but warned that there were “more bumps in the road to economic recovery”. “There is a lot more to do before we can celebrate… good trends don’t pay the rent,” he said. For an economy the size of the US, the change was so small that the Labor Department described employment as “essentially unchanged”. In further good news for the US economy, factory orders rose by 0.6% in October, Commerce Department figures showed. Analysts had expected orders to remain unchanged. The good data pushed the dollar higher against major currencies.

‘Much-needed progress’

Payrolls have fallen every month for almost two years, but this year, the pace of decline has slowed sharply. Revised figures for October also showed an improving trend. Originally, official estimates said 190,000 jobs were lost, that was revised down to 111,000. The White House spokesman, Robert Gibbs, said the sharp slowdown in job losses showed “much-needed progress”, but added that the Obama administration was still looking at providing help to the labour market. More than 15 million Americans are out of work, twice the number at the start of the      Continue reading

European Banks Growing Bigger ‘Sowing the Seeds’ of Next Crisis

Bloomberg | December 2, 2009 | 19:01 EST

European banks are emerging from the credit crisis bigger than before, posing more risk to their national economies. BNP Paribas SA, Barclays Plc and Banco Santander SA are among at least 353 European lenders that have increased in size since the beginning of 2007, according to data compiled by Bloomberg. Fifteen European banks now have assets larger than their home economies, compared with 10 lenders three years ago. While the European Union has grabbed headlines for breaking up bailed-out banks, regulators haven’t reined in firms that shunned state aid and are too big to fail. European bank assets have grown 25 percent since the start of 2007, compared with a 20 percent increase at U.S. lenders, Bloomberg data show.

“We are sowing the seeds for the next crisis,” said David Lascelles, senior fellow at the London-based Centre for the Study of Financial Innovation, a research group. “What we have been doing in the last two years is making banks much bigger. It really goes against the currents of the time.” Banks expanded their balance sheets during the credit bubble, borrowing cheap money in the wholesale market to fund loans and investments. Royal Bank of Scotland Group Plc’s assets ballooned 2,914 percent in the 10 years through 2008 as it made acquisitions, boosted trading and increased lending. Edinburgh- based RBS spent $140 billion on takeovers during the period, culminating in the purchase of ABN Amro Holding NV in 2007 that triggered the world’s biggest bank bailout.       Continue reading

Job Cuts Loom as Stimulus Fades for the US

TWSJ | GARY FIELDS | Tickerforum.org | 01/12/2009

Highway-construction companies around the country, having completed the mostly small projects paid for by the federal economic-stimulus package, are starting to see their business run aground, an ominous sign for the nation’s weak employment picture. Tim Word, vice president of Dean Word Co., a heavy-construction company in New Braunfels, Texas, said his income is now coming mostly from projects that are winding up. He said that in normal times he has about $100 million of signed contracts in hand. But that number has fallen to $30 million, and the pipeline is empty. In the past two years, his work force has shrunk nearly 40% to 260 from 420.

“Having something to bid on is the lifeblood of the industry, and it’s running out,” said Mr. Word. He isn’t sure what will happen next year without new projects. “There’s no pavement fairy that’s going to help.” Since the recession began in 2007, employment in the construction industry has fallen by 1.6 million, the Labor Department says. Though the housing sector accounts for many of those job losses, road builders have also suffered, and executives in the industry expect layoffs to rise next year. The construction industry’s unemployment rate, including related extraction businesses, such as gravel processing, climbed to 19.1% in October, up from 10.7% a year earlier. The transportation and material-moving sectors saw unemployment rise to 11.6% from 7.9% over the same period.       Continue reading

Will Dodd’s Bipartisan Push on Financial Reform Pay Dividends?

TIME | Friday, Nov. 27, 2009

Senator Chris Dodd (left) confers with Senator Richard Shelby during a hearing on Capitol Hill

Two weeks ago, Senate Banking Committee chairman Chris Dodd unveiled an ambitious, far-reaching plan to reform regulation of America’s financial system and quickly found himself facing a brick wall of opposition erected by Republicans, regulators and financial-industry bigwigs. Now he’s trying to work with Republicans to get the thing moving again.

In recent days, Dodd has reached across the aisle to the GOP to create bipartisan working groups to tackle the four hardest questions in financial regulatory reform. Each of the working groups includes one Democratic and one Republican Senator from the committee, each of whom has one staffer along at the meetings. Between them, these 16 people are trying to rewrite the way the American financial industry does business — and, as a result, avoid another global financial meltdown. In theory, the process could succeed. “We have points of agreement,” says one top GOP staffer. But he adds: “The working groups may not work because the issues are much too complex.”       Continue reading

Struggling in a recovering economy

BBC NEWS | 2009/10/29 | 00:03:07 GMT

I've been out of work a few months here or there but never like this -Jon Polis

America slowly appears to be emerging from recession, rebounding from its worst slump in decades. For many Americans the pain is still dragging on. More than 200 years ago, Slater Mill in Rhode Island helped kick off America’s industrial revolution. For centuries, manufacturing, mainly in textile mills, provided jobs in this small north-eastern state, but not anymore. Rhode Island now has the third highest unemployment rate in the country, after Michigan and Nevada. According to the US Labor Department, the rate of unemployment climbed to 13% in September. This does not come as a surprise to Jon Polis. Each day, he searches for work on his computer and in the local newspaper. He says his eight years working for a medical supplies company was over in eight minutes. He was laid off a year-and-a-half ago. Now his benefits have run out and he is living on his savings. “I can last maybe next March or April,” says Jon. “After that I’ll just have to go to my family and ask for money.” At age 53, this is not the first recession he has lived through, but it is the worst. “I’ve been out of work a few months here or there but never like this,” he says.       Continue reading