Austerity Measures Brings More Strikes to Spain
Madrid saw strikes from teachers protesting over austerity measures. About 43% of all teachers walked out; strike may foreshadow what is to come.
Comments »Reminder: Italian 10yr on the Rise
Italy 10 yr is at 5.58% and Spanish 10 yr is at 5.35%.
Comments »FLASH: PHOTO FROM RENO AIR RACE CRASH: “MASS CASUALTY SITUATION”
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PHOTO SOURCE
RENO, Nev. (AP) – A plane plunged into the stands at an air race event in Reno in what an official described as a “mass casualty situation.”
It wasn’t immediately known how many people were killed. But video of the crash showed a horrific scene of bodies and wreckage at the front of the stands.
Mike Draper, a spokesman for the air races, told The Associated Press that Jimmy Leeward was the pilot of the P-51 Mustang that crashed into the box seat area at the front of the grandstand about 4:30 p.m. He said he did not have any information on the number of injured.
The National Championship Air Races draws thousands of people every year in September to watch various military and civilian planes race.
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FLASH: MIDGET BLOOMBERG PREDICTS RIOTS AND SOCIAL UNREST
Mayor Bloomberg warned Friday there would be riots in the streets if Washington doesn’t get serious about generating jobs.
“We have a lot of kids graduating college, can’t find jobs,” Bloomberg said on his weekly WOR radio show.
“That’s what happened in Cairo. That’s what happened in Madrid. You don’t want those kinds of riots here.”
In Cairo, angry Egyptians took out their frustrations by toppling presidential strongman Hosni Mubarak – and more recently attacking the Israeli embassy.
As for Madrid, the most recent street protests were sparked by widespread unhappiness that the Spanish government was spending millions on the visit of Pope Benedict instead of dealing with widespread unemployment.
Bloomberg’s unusually alarmist pronouncement came as President Obama has been pressuring reluctant Republicans to pass his proposed job creation plan.
“The damage to a generation that can’t find jobs will go on for many, many years,” the normally-measured mayor said.
Bloomberg gave Obama kudos for coming up with a jobs plan.
“At least he’s got some ideas on the table, whether you like those or not,” he said. “Now everybody’s got to sit down and say we’re actually gonna do something and you have to do something on both the revenue and the expense side.”
And everybody’s got to share in the pain.
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U.S. Scrambles to Avert Palestinian Vote at U.N.
Napolitano Rolls Out New TSA Policy for Kids Under 12 to Conceal Pedophilia
Jubak: Get ready for the next crash
Jim Jubak at MSN has out an assessment of the EU crisis and banking issues, in his regular, esteemed form. You really must read the thing in its entirety.
Comments »Financial markets are behaving as if they expect a European banking crisis that would require the bailout or nationalization of some European banks. That would feel like a replay of the financial crisis that followed the bankruptcy of Lehman Brothers in the fall of 2008. Only this time, the epicenter would be Europe instead of the United States, and the ripples would expand from the eurozone outward into global financial markets.
How realistic is that fear? Very, I’m afraid. European banks are facing a very real liquidity and capital crisis that could lead to the need for a government rescue of some globally significant banks.
But the crisis isn’t an exact replay of the 2008 crisis. The effects of the crisis would not be limited to Europe, but the likelihood that a European crisis would take down a major U.S. bank — in a mirror image of the 2008 crisis where problems originating in the United States did lead to the bailouts of banks in the United Kingdom, Germany and Belgium — is relatively small. On the other hand, the crisis is potentially worse this time around because the European Central Bank is much less able to intervene as a lender of last resort than the U.S. Federal Reserve was in 2008.
Understanding this crisis
The current European banking crisis is rooted in the Greek, Italian, Spanish, Portuguese and Irish debt crises. But the repeated collapse-bailout-collapse-again pattern of the prices of bonds of those countries wouldn’t have produced the current mess without a series of missteps by banks, bank regulators and central banks.European banks hold a huge amount of government debt from the countries involved in the crisis. German banks, for example, held $22 billion in Greek government debt at the end of 2010, according to the Bank for International Settlements. If you add holdings of Greek government debt to holdings of private-sector Greek debt, the exposure gets much higher. For example, in May, Fitch Ratings said that French bank Credit Agricole (CRARY +3.59%, news) had $35 billion in exposure to Greek government and private debt. BNP Paribas (BNPQY -0.82%, news) and Société Générale (SCGLY +6.83%, news) had exposure of about $11 billion each.
The exposure of European banks to Greece, however, is small souvlaki compared with exposure to the much larger Italian economy. BNP Paribas, for example, has an estimated $31 billion in exposure to Italian government and private-sector debt. Even where the total for Italy is not as high as for Greece, the additional exposure is big enough to add to worries. Credit Agricole has an estimated $17 billion in Italian exposure.
But the current banking crisis owes as much to the reaction of banks and bank regulators to the problem as to the size of this exposure. Nobody now expects that Greece will be able to avoid a default in the end. Even Sunday’s announcement of new measures to close a $3 billion budget gap just served to convince financial markets that the more Greece cuts, the more the economy will slow, and the fewer taxes the government will collect. Like last year’s rescue package, this year’s deal, if ultimately approved, only buys time.
When it Rains it Pours: French Nuclear Waste Plant Explodes
A New Lower Manhattan a Decade After 9/11
Photo Credit: Joe Woolhead; Courtesy Silverstein Properties
Revitalization seemed almost inconceivable at the time the grey powdery ash was floating through the air, thick with the smell of acrid smoke still rising from the rubble. It made your eyes sting for months..In less than two hours on the morning of Sept. 11, 2001, Lower Manhattan, the world’s financial district and bustling home to hundreds of thousands of workers each day, was transformed into a ghost town.
Hundreds of companies doing business in the neighborhood were forced out by the terrorist attacks that felled the twin World Trade Center towers and hundreds more left on their own in the aftermath.
Comments »Labor’s Dwindling Share of the Economy and the Crisis of Advanced Capitalism
Charles Hugh Smith publishes Foreclosure Crisis Weekly, dedicated to documenting the often-amazing foreclosure crisis.
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All attempts to reform the Status Quo of advanced finance-based Capitalism will fail, as its historically inevitable crisis is finally at hand. It is self-evident that conventional economics has failed, completely, utterly and totally. The two competing cargo cults of tax cuts/trickle-down and borrow-and-spend stimulus coupled with monetary manipulation have failed to restore advanced Capitalism’s vigor, not just in America, but everywhere.
Conventional econometrics is clueless about the root causes of advanced finance-based Capitalism’s ills. To really understand what’s going on beneath the surface, we must return to “discredited” non-quant models of economics: for example, Marx’s critique of monopoly/cartel, finance-dominated advanced Capitalism. (“Capitalism” is capitalized here to distinguish it from “primitive capitalism.”)
All those fancy equation-based econometrics that supposedly model human behavior have failed because they are fundamentally and purposefully superficial: they are incapable of understanding deeper dynamics that don’t fit the ruling political-economy conventions.
Marx predicted a crisis of advanced Capitalism based on the rising imbalance of capital and labor in finance-dominated Capitalism. The basic Marxist context is history, not morality, and so the Marxist critique is light on blaming the rich for Capitalism’s core ills and heavy on the inevitability of larger historic forces.
In other words, what’s wrong with advanced Capitalism cannot be fixed by taxing the super-wealthy at the same rate we self-employed pay (40% basic Federal rate), though that would certainly be a fair and just step in the right direction. Advanced Capitalism’s ills run much deeper than superficial “class warfare” models in which the “solution” is to redistribute wealth from the top down the pyramid.
This redistributive “socialist” flavor of advanced Capitalism has bought time–the crisis of the 1930s was staved off for 70 years–but now redistribution as a saving strategy has reached its limits.
To read the rest and see some nice chart porn, go here.
Comments »IMF officials walk on Athens
Comments »BRUSSELS (AP) — Disagreements over Greece’s massive budget deficits and how to make up for the funding shortfalls led international debt inspectors to suspend their review and leave Athens on Friday, as the finance minister warned an even deeper recession will hurt its deficit-cutting efforts.
The unexpected departure of Greece’s debt inspectors — officials from the European Commission, the European Central Bank and the International Monetary Fund — marks yet another occasion of conflict between international institutions demanding greater reform efforts and a government and country that are reaching their limits.
Greek Finance Minister Evangelos Venizelos, who denied there were any serious disagreements, said Greece’s economy will likely shrink up to 5 percent this year — even more than the 4.5 percent decline seen in 2010 and far above the 3.75 percent drop in 2011 output expected just three months ago.
A return to growth next year also looks increasingly unlikely, Venizelos warned.
The ever worsening recession will make it harder for Greece to cut its budget deficit to 7.5 percent of gross domestic product by the end of this year, as it had promised in return for the bailout loans it needs to avoid bankruptcy.
Greece has been slashing spending and raising taxes since the government discovered in late 2009 that it was running a much larger deficit than its predecessors had claimed — some 15.4 percent of economic output — and that it had run up almost euro300 billion in debt.
As Venizelos prepared his nation for even more economic pain in a news conference Friday, the finance minister vowed that there will be no further “revenue generating measures,” government jargon for tax increases.
“The main thing for us is to halt the recession,” Venizelos told journalists. “To not have actions or omissions that will make the recession deeper and will not allow us in 2012 to have a better macroeconomic performance.”
Venizelos said the departure of the so-called troika had been foreseen and that the experts would return in less than two weeks, once the government had finished its draft budget for 2012.
The talks “were conducted and are being conducted in a very friendly and creative climate,” Venizelos added.
But a European Unions official told the Associated Press that the interruption of the troika’s mission was unplanned and that it came amid disagreements over the level of Greece’s deficit in 2011 and 2012 and how to deal with those budget shortfalls.
The mission had been expected to conclude early next week, the official said. He was speaking on condition of anonymity because of the sensitivity of the issue.
Greece was granted a euro110 billion ($157 billion) bailout from other eurozone countries and the IMF in May 2010 and has been promised an extra euro109 billion to keep it afloat until mid-2014.
Since then, the EU, the ECB and the IMF have been checking on the country’s reform efforts every three months, adjusting their economic projections and demanding more cuts to make up for shortfalls.
Their departure Friday brought back memories of a similar incident during their most recent mission in June, when the troika left Athens and only returned weeks later, after Greece’s parliament passed an extra euro28 billion in cuts and a euro50 billion privatization plan.
But it is unclear whether there is room for even more efforts this time.
Greece’s troubles are being worsened by a slowing global economy, with growth tapering off even in strong countries like Germany and the U.S.
Venizelos said Greece’s deficit targets have to be adjusted for the worse-than-expected recession, since much of the economic decline is outside the country’s control.
The finance ministry declined to release new projections for its 2011 deficit, but press reports have put the figure above 8 percent. The troika, meanwhile, insists that the technical adjustment for the steeper recession would raise the target only to about 7.7 percent from 7.5 percent currently.
Greece has been struggling to meet its targets, particularly those for revenue, not only because of poor economic growth but also because tax evasion remains rampant and it has been slow to implement reforms its creditors say will make it more competitive.
In a statement Friday, the troika said it “temporarily left Athens to allow the authorities to complete technical work, among other things, related to the 2012 budget and growth-enhancing structural reforms,” adding that it plans to return by mid-September.
That leaves little time for the troika to complete its final report before Greece has to receive its next aid installment, some euro8 billion, at the end of September.
Eurozone nations are also struggling to finalize the terms of the second Greek aid package. A demand from Finland to get collateral for its contributions to the rescue loans has angered other countries, while Greece has threatened to abandon a crucial bond swap deal for private investors unless it gets 90 percent participation.
