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..There's a little Samuel Pepys in all of us..

Wednesday, August 03, 2011

Finally.. the idiotic drama we've been watching in the US for the past week, has fizzled to an end..
Barack signed a new deal into law last evening.. finishing a Passion Play that has brought the United States into an entirely new light in the eyes of the world..
It raises the debt limit by up to $2.4trillion (£1.5trillion) from $14.3trillion, and makes savings of at least $2.1trillion in 10 years..
The deal was struck after negotiations between Republicans, Democrats and the White House went down to the wire.. a process of one upmanship that came close to bringing world confidence in the US as a leading economy into doubt..
This issue, as in the form it was finally agreed upon.. could have been signed, sealed, and delivered.. without causing 9 days of losses on markets around the world.. and without casting ridicule on American legislators..
And the issues remain.. The bipartisan leaders of Congress, who argued and negotiated for months to cut spending and raise the nation's borrowing limit in the nick of time, eagerly moved on yesterday to what they hope will be a more popular cause..
The almost singular focus on measures that might create jobs, was recognition that voters care far more about their own finances than the $14.3 trillion hole the nation is in.. No matter how much of either party's agenda gets passed before the 2012 elections.. they both hope the debate improves their chances of re-election..
"Anything that moves is going to be called a jobs agenda pretty soon," quipped Bruce Josten, chief lobbyist for the U.S. Chamber of Commerce..
Even before signing the debt bill.. Barack came to the White House Rose Garden to promote his jobs agenda..
'First things first' would seem to be the message.. but the incessant sound of both foreign and domestic sniggering, is going to take a while to drown out..
If they can't agree on a budget to save their own skins.. what possibility exists for agreement on a measure that will put at least 2% of the nations unemployed back to work..? And that 2% is a minimum requirement..
And as for the more immediate effects of this dithering..
The S&P 500 turned negative for the year on Tuesday as the wrangling over the U.S. debt ceiling faded and investors turned their attention to the stalling economy..
The broad-based index fell for a seventh day and crashed through the key 200-day moving average in an ominous sign for markets. The seven days of losses mark the longest losing streak since October 2008..
The selloff accelerated into the close as volume jumped well above average. The fall was broad-based, with four stocks falling for every one rising on the New York Stock Exchange..
The index also broke through its 2-1/2 year uptrend line from its bear market low in March 2009. Thursday was the index's worst day in a year..
Moody's Investors Service on Tuesday confirmed its Aaa rating of the United States, citing the decision to raise the debt limit, but assigned a negative outlook that could pressure lawmakers to cut the U.S. deficit..
Moody's decision came a few hours after rival Fitch Ratings upheld its AAA rating of the United States. Fitch also warned the world's largest economy must cut its debt burden to avoid a future downgrade..
Standard & Poor's, which many predict will cut its rating, has yet to give its opinion of the deficit reduction and debt ceiling deal..
The falls worsened this afternoon after data indicated that the US services sector, which employ nearly 90 per cent of American workers, recorded its weakest growth in 17 months in July..
The Institute for Supply Management said that its index for services companies fell to 52.7 from 53.3 in June.. although that figure still indicates expansion rather than contraction..
In New York the Dow Jones Industrial Average fell 160 points, or 1.3% in morning trading.. If the index closes down today it will be the ninth consecutive day of falls.. the first time such a record has been set since 1978..
As he signed the compromise legislation.. Obama complained that Washington has been "absorbed" by the crisis of a looming default.. but American families are still facing a "quiet crisis" of persistently high unemployment..
He promised to make job-creating measures his top priority when Congress returns from vacation.. including pending trade deals.. extending payroll tax cuts.. and overhauling patent laws..

And as Washington finally signed off on the last-minute deal to raise the U.S. debt ceiling, investors turned their attention back to the serial debt woes in Europe.. and they did not like what they saw..The grand European plan that came together barely two weeks ago, aimed at once again bailing out Greece and preventing its ills from spreading to bigger European economies, no longer seems so reassuring. Suddenly, the wolves are back at Europe’s door..
Yesterday, traders renewed their attacks on Italy and Spain, the third and fourth largest economies in the 17-nation Eurozone, pushing their borrowing costs.. at least for now.. to the tipping point that led Greece, Ireland and Portugal to apply for bailouts..
Some now fear that Italy and Spain could run out of cash to meet their debt obligations in a matter of months if, like the others, they are shut out of international markets..
The latest 'Marshall Plan' for Europe was supposed to keep those nations safe from the spreading fire and.. by extension.. cushion the many European and American banks that hold their debt..
While the economies of Greece, Ireland and Portugal are relatively small.. European leaders, noteably Germany and France, would face challenges of a different magnitude if Italy and Spain were swamped by the same forces..
Overshadowed by the US for the past week or so.. the spotlight will now turn back on Europe..
And in an update here..
n the early 1990s, the pound and the Italian lira both suffered speculative attacks that forced them out of the European Exchange Rate Mechanism.. Italy is now enduring more turmoil in financial markets, but with a big difference..
Unlike the UK, Italy adopted the Euro when it was launched in 1999, giving the Lira the heave ho.. Its inability to leave an inflexible monetary arrangement is compounding a crisis that threatens to overwhelm the European economy.. Italy has no option but to act directly on the cause of investor concern.. the high level of national debt..
The global economy is only fitfully recovering from the collapse of the Western banking system under a cascade of bad debts in 2007-09. The remedial measures that governments adopted included a massive increase in public borrowing. It made sense for them to try to sustain domestic demand rather than risk a repeat of the Great Depression. But some governments had spent so much in the boom years that they were ill equipped to allow a necessary additional expansion of public borrowing in the recession..
The consequences are now obvious in the economies of southern Europe. Greece has a huge budget deficit. Portugal has high levels of private debt. Spain has both of these elements. Italy has a mountain of government debt, amounting to some 120 per cent of GDP..
But whereas Greece and Portugal are peripheral economies within the Eurozone, Spain is significantly bigger and Italy is among the world’s seven largest advanced industrial economies..
When Italy falls, the ripples will be something akin to a tsunami on world markets..
Yields on Italian 10-year government bonds rose yesterday to 6.25%.. The difference between Italian and equivalent German government bond yields is almost 4 percentage points..
This is the widest spread since the Euro was established.. International investors are bidding down the price of Italian bonds (which causes the yield to rise) because they are worried that Italy will be unable to pay its debts..
This is a scenario we'll see again and again, until the austerity measures set in place by those governments threatened with bankruptcy come into play..
While gold continues to rise.. the metal's at an all time high today, above the $US160/troy ounce.. and while there are some analysts saying the gold standard should be revised.. they're well in the minority..

We mentioned the problems in defining 'insanity' in a case the likes of Anders Breivik..
He has added some icing to that defence.. presenting a list of completely unrealistic demands in exchange for his cooperation..
Geir Lippestad says his client has two lists of demands.. One consists of requests common among inmates such as for cigarettes and civilian clothing..
The other is "unrealistic, far, far from the real world and shows he doesn't know how society works," according to Lippestad..
Although Breivik has agreed to be examined by local psychiatrists, he also wants to be investigated by Japanese specialists.. "He claims the Japanese understand the idea and values of honor and that a Japanese (specialist) would understand him a lot better than any European would."
Lippestad said his client has also demanded complete political reform, in which he wants to be assigned a key role..
"His demands here includes the complete overthrowing of both the Norwegian and European societies," he said, noting it includes the resignation of the Norwegian government but declined to give further details. "But it shows that he doesn't understand the situation he's in..".
This is an issue that will take months to even come close to a resolution, or a trial.. The examinations alone could take a year or more..

Security experts have discovered the biggest series of cyber attacks to date, involving the infiltration of the networks of 72 organizations including the United Nations, governments and companies around the world..
Security company McAfee.. which uncovered the intrusions.. said it believed there was one “state actor” behind the attacks but declined to name it, though one security expert who has been briefed on the hacking said the evidence points to China..
The long list of victims in the five-year campaign include the governments of Canada.. the US.. Taiwan.. India.. South Korea.. and Vietnam.. the Association of Southeast Asian Nations (ASEAN).. the International Olympic Committee (IOC).. the World Anti-Doping Agency.. and an array of companies, from defense contractors to high-tech enterprises..
In the case of the United Nations, the hackers broke into the computer system of the UN Secretariat in Geneva in 2008, hid there unnoticed for nearly two years, and quietly combed through reams of secret data, according to McAfee..
Makes technology a bit of a joke when it comes to security.. For as long as the files are out there.. there will be cyber-geeks only too willing to hack into them for whatever purpose they might have..
Seems there is still an argument for certain matters to be confined to paper and pen..

A note on what's happening in India..
The upcoming Uttar Pradesh elections and its importance for Rahul Gandhi have prompted the Centre to try and speed up the land acquisition bill's introduction and passage..
The government is keen to introduce the bill in the current session of Parliament, which ends on September 8, though rural development minister Jairam Ramesh had earlier indicated that the consultation process would take some time..
The bill will go to the standing committee after introduction and so, unless it is introduced in the monsoon session, it would be impossible to pass the bill in the winter session. However, the Congress realises the importance of enacting the bill by the winter session ' that is, before the Uttar Pradesh elections early next year..
Uttar Pradesh politics is now dominated by debates over land acquisition and rehabilitation, and these could become key issues during the Assembly polls..
Besides, Rahul, who has been directly involved in the land agitation in the heartland state, has promised a new law at the earliest. It will be a huge embarrassment for him if the government fails to pass the bill before the election, which is crucial for his political career..
The Bahujan Samaj Party is already trying to corner the Centre in Parliament over its failure to amend the archaic Land Acquisition Act. Its intention is to dilute Rahul's onslaught on the Mayavati government over forcible land acquisition in western Uttar Pradesh..
Therefore, the Centre is working on a plan to introduce the bill at least on the last day of the monsoon session so that it can be forwarded to the standing committee for study..

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