Eideard

As much space as they deserve
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All of the post-mortems on the CNBC Republican debate focused on the sad, but hilarious, senior moment Gov. Rick Perry suffered when he couldn’t remember the third federal agency he wants to eliminate.

…But what also stood out as perplexing — and stunning — was how all of the candidates were unwilling to hold Wall Street accountable for the deplorable economic condition the nation continues to find itself in.

When the housing crisis was raised, Mitt Romney and most of the others chose to unleash their rage on the consumers and the financial reform bill that was passed after the crisis hit, instead of on the shady practices of Wall Street…

The favorite GOP bogeyman is Fannie Mae and Freddie Mac, the government-backed housing lenders. Yet anyone with half a brain knows that those institutions brought on Democrats and Republicans on their payroll in order to ensure that Congress would let them continue practices as usual.

During the debate, Newt Gingrich was asked about the $300,000 he was paid by Freddie Mac in 2006, which he said was for “advice.” He was quick to say he did no lobbying on behalf of Freddie Mac, but we all know that his presence, along with other former politicians and political strategists from both parties, greatly helped the company prevent congressional scrutiny…

What Gingrich and the other candidates absolutely refused to do was tell the public that one of the biggest proponents of an aggressive home ownership plan in America was President George W. Bush…

It is beyond clear that we got into this huge mess because we were too lax in holding banks accountable. Getting rid of the Glass-Steagall Act, thus allowing commercial banks and investment banks to merge, was a disaster.

Not a single GOP candidate said we should put the provision separating those activities back in place…

In no way can I remove the role the consumer played in the economic debacle, but for the GOP candidates to act like we had too many regulations, and that’s why Wall Street bankers lost their minds, is deplorable…

How in the world can we trust that any of these candidates will care about the Average Joe, Jane, Jose, Jimmy, Janice or Jamila if they are elected president, when they won’t even hold Wall Street accountable in a debate?

Roland Martin pretending that we’re just discovering that the Republican Party is a wholly-owned subsidiary of the US Chamber of Commerce is a bit disingenuous.

Anyone hear a moderator ask if anyone understands evolution, BTW?

But, wait – there’s more. We can do it, again.

Ratings agency Moody’s on Wednesday placed the United States’s triple-A debt rating on a downgrade watch because of rising prospects the US debt limit will not be raised in time to avoid default.

“The review of the US government’s bond rating is prompted by the possibility that the debt limit will not be raised in time to prevent a missed payment of interest or principal on outstanding bonds and notes,” Moody’s said in a statement after the US financial markets closed…

Moody’s recalled that it had announced on June 2 that a rating it would be likely “in mid-July unless there was meaningful progress in negotiations to raise the debt limit…”

The agency insisted that even a brief delay in US payments would likely result in a lower rating.

“An actual default, regardless of duration, would fundamentally alter Moody’s assessment of the timeliness of future payments, and a Aaa rating would likely no longer be appropriate,” it said…

The stalemate in Congress is threatening to push the US into defaulting on its obligations by August 2, according to Treasury estimates.

I realize most Americans don’t know the definitions for when a national economy enters or leaves a recession. Everyone would rather leave it to seat-of-the-pants judgements based on commuter traffic, what your kids’ classmates bring for school lunch or how many families in the neighborhood are in foreclosure.

Americans – who think there’s no reason to pressure the Congressional thugs who don’t care if the United States defaults on our debts – should step back and ask themselves if they want to go through everything that’s happened to this nation’s economy since December 2007 all over again? Only worse?

Click photo for video – about 9 minutes long. Sorry for the commercial.

John Taylor visited CNBC the other morning to discuss currency trading – a topic guaranteed to give you an ulcer if you do it for a living – or bore you into a greenback coma.

As an ingredient of his analysis, he makes the point that the Republican Party is using their majority in the House of Representatives to send our economy into another recession. We have left the boundaries of the Great Recession caused essentially by greedy investment banks and criminal mortgage procedures – aided by Republican policies obscuring and inhibiting oversight. They have decided to trigger another – deliberately.

He says this is a strategy decision by the Republican Party. Cause another recession – blame the Democrats and President Obama for it. Run for office as the alternative which will save the world.

I wonder if the Democrats and Obama have enough smarts, enough power to prevent this from happening?

Demonstrators gathered outside Parliament in Reykjavik

Iceland emerged from recession in the third quarter, official data showed Tuesday, returning to growth for the first time since its financial system collapsed at the height of the crisis in 2008.

Iceland’s real gross domestic product grew by 1.2 percent in the July-September period from the previous quarter, the first quarterly increase since the same period in 2008. Iceland entered a slump after its overleveraged financial sector collapsed in the wake of Lehman Brothers’ bankruptcy.

Like Ireland and Greece, Iceland has taken a large dose of austerity measures to rebuild its economy. Unlike Ireland and Greece, however, Iceland allowed private banks to fail, and its currency, the krona, has declined by about 46 percent against the dollar since the start of 2008.

“Excluding the financial system, the real economy is doing well,” Arsaell Valfells, a professor of business and finance at the University of Iceland, said in telephone interview. Retail spending was still shrinking, he said, but the export sector, consisting mainly of fish, aluminum and tourism, was improving.

“We’ve basically gone back to 2003 in terms of the level of standard of living,” he said. The worst has been felt by younger people who borrowed at the height of the bubble and are now having to reduce their debt, he said. “But they’ll come through this,” he added…

The three biggest Icelandic banks, which had expanded aggressively during the credit bubble, all failed and were nationalized in October 2008. Cleaning up the mess left by one of those, the Icesave unit of Landsbanki, has soured relations with Britain and the Netherlands and delayed international aid…

Mr. Valfells said that within a few years Iceland should be able to exit the I.M.F. agreement, and that because of the determination of the Icelandic people, the Icesave problem would be “only a minor issue for the long-term outlook.”

“We will grow out of this,” he said, “and could start now to finance our way out of it.”

Nice to see that sort of pride and determination. I think if there was a government in Eire with more backbone than our own – here in the United States – they could do much the same as Iceland.

Regardless – I know that economists calculating the end of a recession still doesn’t feel like the end. We’re sneaking up on holiday feasts and I for one will be certain to buy some Iceland lamb and Iceland hake.

Most Americans oppose it, but the government’s bailout of Wall Street appears in hindsight as a heroic rescue that kept the world economy from collapsing, says analyst Fareed Zakaria.

The Wall Street investment bank Lehman Brothers failed two years ago, leading to a massive loss of faith in the banking system and to a dramatic drop in the world economy. Congress passed the bank bailout known as TARP, or Troubled Asset Relief Program, in October 2008, the month after Lehman’s collapse.

Zakaria said the creation and passage of TARP during the waning days of the Bush administration required extraordinary cooperation between Democrats and Republicans in Washington.

“It was a very difficult thing to do, to take billions of taxpayer dollars and bail out the financial institutions that precipitated the crisis,” Zakaria said. “I would make only two points, if it would make people feel any better. First, the management of most of the banks that really screwed up were, in almost every case, let go … and finally the government didn’t spend an enormous amount of money on it. Because TARP was so successful, the financial system recovered pretty rapidly and most of the government’s investments in those banks have made a healthy profit.”

The host of his own Sunday show on CNN, Fareed Zakaria, had this conversation with interviewers about the Great Recession, how we got here and what was done to prevent a total collapse of the American economy. Here is an edited transcript:

I shouldn’t be astonished at the numbers who are led around by conservative ideologues, opposing TARP without having the faintest notion of economics, history or politics. Not to mention some of my dearest friends on the Left who think we’ve already skipped past capitalism. Our nation leads industrial nations in cultural backwardness. Bleating about government and freedom is just one more product of superstition and ignorance.

Ron Paul-style themes have percolated through the conservative movement since Paul’s beat-the-spread 2008 presidential campaign. Of all those themes, the one that has achieved the widest audience is Paul’s call for a return to money based on precious metals such as gold and silver…

In 1929, the U.S. economy slumped into recession. Under the weight of a series of terrible decisions, that recession collapsed into the worldwide Great Depression.

But why did decision-makers make so many bad decisions? The short answer is that they were trapped. Almost all of the right decisions would have ballooned the U.S. federal budget deficit. As budget deficits expanded, investors would inevitably worry that their dollars might lose value in the future. They would demand to trade their dollars for gold at the fixed price of $20.67 to the ounce. Under the rules of the gold standard, the U.S. government would be obliged to sell.

As long as the deficits continued, the U.S. government would lose gold. Threatened with the exhaustion of its gold supply, the government felt it had no choice: It had to close the budget deficit. So, in the throes of a severe downturn, the U.S. government did exactly the opposite of what economists would otherwise advise: It cut spending and raised taxes — capsizing the economy even deeper into depression.

It’s very strange to hear gold standard advocates criticize President Hoover for imposing steep tax increases in 1932, the Depression’s worst year. Yet the gold standard they champion was the reason for the tax increases they deplore…

Every other gold-standard country faced similar challenges in the 1930s. Those countries that quit gold first, like Britain, suffered least. Those that hung onto gold longest — the United States and France — suffered most.

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Container ship loading in Hamburg – this week
Daylife/AP Photo used by permission

The eurozone emerged from its worst recession since World War II in the third quarter of last year, thanks to strong exports, according to official figures released Friday.

The combined economy of the 16 European Union (EU) nations that use the euro grew by 0.4 percent in the third quarter of 2009, compared with the previous three months, EU statistics office Eurostat said in its final figures, confirming previous estimates.

It ended the economic contraction in the previous five consecutive quarters, as well as the deepest zone’s recession.

Eurostat said economic growth in the third quarter was mainly due to strong exports, which increased by 3.1 percent over the previous quarter, but household final consumption and investment, the other two growth engines, had fallen by 0.1 percent and 0.8 percent, respectively.

The 16 countries that use the euro saw their trade surplus with the rest of the world rise massively in October as imports fell and exports remained at recent high levels — despite the ongoing strength of the currency.

The figures provide further evidence that the eurozone is benefiting from recovering global demand as its leading export markets emerge from recession…

Eurostat, the EU’s statistics office, said Friday that the eurozone’s trade surplus during the month spiked to €8.8 billion from €0.9 billion in September…

Hey, I know what a trade surplus is. Anyone else remember?

Pubs chain JD Wetherspoon said today that it would create 10,000 jobs over the next five years with the opening of 250 new pubs.

The business, which currently employs 21,000 people and has 743 pubs across the UK, is to invest £250m in the new outlets over the period. It expects to open new pubs in locations including Sheffield, Livingston, Leominster, Otley, New Malden, Liverpool, Haverfordwest and Newcastle. The roles include management positions, as well as bar and kitchen staff…

Wetherspoon opened its first pub in December 1979. In September it hailed its best ever annual results after the company went back to basics to ride out the recession…

The chain said it took lessons from the recessions of the 1980s and 1990s to combat tough trading conditions, “concentrating on the key ingredients of standard, service, staff training and incentives”.

Sounds like the Brits have their priorities straight.

OK. So, I only stuck 2 cliches into the headline. You get the idea.

The U.S. economy grew at a 3.5% annual rate in the third quarter, ending a string of declines over four quarters that resulted in the most severe slide since the Great Depression…

The positive GDP report is one more sign that the economy has likely pulled out of the deep recession that started in December 2007…But the stronger-than-expected growth is likely to lead more economists to declare that the economy hit bottom earlier this year and turned higher at some point in the summer…

Bill Hampel, chief economist of the Credit Union National Association, said it’s encouraging that the economy was able to grow at all without businesses actually rebuilding inventory. He said that is a positive sign of growth yet to come.

“The inventories still need to be replenished, and when they are, it will give us an even bigger lift,” he said. “I don’t think this report is a sign of a booming economy, but it does seem to be setting down roots that will be sustainable.”

There are negatives included to balance each of the positives in the article. Fact is, most economists are positive.

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Jean-Claude Trichet
Daylife/Reuters Pictures used by permission

The global economy is expanding again and financial conditions have improved significantly, the International Monetary Fund (IMF) has said.

But in its latest World Economic Outlook, the IMF said the “pace of recovery is expected to be slow”. It added that the recovery is likely to be “insufficient to decrease unemployment for quite some time“.

On Wednesday, the IMF cut its forecast for the amount that banks are likely to lose in bad loans and investments…

Separately, the head of the European Central Bank (ECB) said that the 16 countries in the eurozone should withdraw stimulus packages in the next two years.

“From an ECB point of view, it is important to do what is necessary to exit as soon as possible,” Jean-Claude Trichet said at a meeting of EU finance ministers and central bank governors in Gothenburg.

The global recovery is being led by Asia, where economies have “withstood the financial turmoil much better than expected,” the IMF said.

Much better then who expected.

They always got that part right.