Central Perk

duminică, 19 iunie 2011

Mish's Global Economic Trend Analysis

Vote For Whoever You Want, Bailout Policies Won´t Change One Bit; A Look at Eurozone and US Politics; Would it Have Mattered if McCain Won in 2008?
Der Spiegel Claims Merkel-Sarkozy Agreement Has Collapsed; Bloomberg Reports Europe May Withhold Half of Greek Payment
UK Banks Abandon Eurozone; Greek PM Seeks Constitutional Changes; Trichet Blames Everyone but Europe for Global Imbalances; Credit Crunch Coming Up?

Vote For Whoever You Want, Bailout Policies Won´t Change One Bit; A Look at Eurozone and US Politics; Would it Have Mattered if McCain Won in 2008?

Posted: 19 Jun 2011 05:52 PM PDT

Take a good look at policies in Ireland, in Spain, in Portugal, in Greece. In Ireland, voters overwhelmingly rejected the policies and leadership of Prime Minister Brian Cowen in the biggest rout in history as noted in Timeline Ireland.

Did it matter? How?

Enda Kenny, the new prime minister quickly caved-in to the ECB and EU regarding haircuts on government bonds.

Similar setups are underway in Portugal, Spain, and Greece.

Also, take a look at policies in Germany where chancellor Angela Merkel completely and totally caved-in to French president Nicolas Sarkozy and ECB president Jean-Claude Trichet regarding rollover of Greek debt.

If ever, if ever a ~~wizard~~ wimp there was, Merkel is it.

Simply put, bankers insist on being bailed out, and under threats of Armageddon they are. Taxpayers foot the bill regardless of who they vote for.

Socialize the Losses, Privatize the Gains

The EU Observers reports The junta of experts tells us: 'Vote how you like, but policies cannot change'

The formal trappings of clean elections - in which political parties with competing manifestoes contest a ballot free of voter intimidation - are all still there, but someone else has decided in advance what the result will be.

It's not the voters that are intimidated any more: it's the parties that are.

The count of EU member states now tallies to four - Ireland, Portugal, Finland and Greece - where this post-political phenomenon has materialised, but committed democrats across the Union should wonder which country is next.

This has not happened by putsch or coup d'etat, at least not one involving any guns or tanks. There are no colonels or partisans who have captured the garrisons and seized the telephone exchange.

Yet a junta has installed itself nonetheless, a junta of 'experts', technocrats, those educated in the knowledge of What Needs To Be Done. Wherever these masters of the European universe happen to be hovering at any one moment, the refrain in effect is the same: 'Of course, there is no question that you are still allowed to vote however you like. Nevertheless, the policies absolutely cannot change even if the government does.'

Apart from a handful of Irish democrats, on a European level, the democratic implications of this orchestration went largely unnoticed. It was only when Portugal became the focus of the European engineers that ears pricked up.

One week in April, Portuguese banks announced they would stop buying government bonds if Lisbon did not seek a rescue. Later that week, the head of the country's banking association, Antonio de Sousa, admitted that he had been given "clear instructions" from the ECB and the Bank of Portugal to cut off the tap.

Without the support of domestic banks, Socrates had no choice but to request an external lifeline. Days before, the opposition Social Democrats withdrew their support for the government over an austerity programme they would later sign up to, forcing the minority government into a snap election.

The very day that Portugal finally capitulated, EU and ECB experts demanded that even though the parties were in the middle of an electoral campaign, all main parties sign an accord endorsing the bail-out memorandum, no matter the result of the vote.

Letting the people decide what was best for them was out of the question. "Let's not have a public dialogue every day," [Irish Economy Commissioner] Olli Rehn declared.

His ECB colleague, Jean-Claude Trichet, echoed his concerns, saying simply that bail-out negotiations were "certainly not for public" discussion.

Experts and colonels

And here's the kicker.

According to a poll conducted by Greece's Kappa Institute two weeks ago, 30 percent of Greek respondents actually want the country to be led by "a group of experts and technocrats."

A plurality of Greeks have now become so disillusioned with sovereignty and democracy that they think at least the experts could deliver something better than the seemingly insurmountable unemployment, corruption and economic collapse they see around them.

The same survey said that less than a quarter believed that a democratically-elected government will be able to overcome the ordeal they are going through.

But if the experts, the technocrats who are sidelining democracy in their subtle way, feel heartened by such polls, they should pause when they read the rest of this census.

A full 22.7 percent want "a strongman" to resolve the ongoing crisis.

There is much more in the Observer article, especially in regards to Ireland. Inquiring minds may wish to give it a closer look.

Is it Any Different in the US?

For all the political bickering in the US would it have mattered if McCain won the last election? If so how?

Would McCain have bailed out the banks and voted for nonsensical stimulus programs? Of course. Indeed McCain voted for bailouts while the 2008 election campaign was still in progress.

Flashback October 01, 2008: Obama, McCain Vote for $700B Bailout Bill in Senate

McCain now says he was "misled" as noted in Talking Points Memo McCain Rewrites Own History On Bailout Vote

McCain said recently that he only voted for the $700 billion package because Henry Paulson and Ben Bernanke misled him, by assuring him it would focus on the housing meltdown, rather than on Wall Street. But that appears to be directly contradicted by the record.

McCain said recently that he only voted for the $700 billion package because Henry Paulson and Ben Bernanke misled him, by assuring him it would focus on the housing meltdown, rather than on Wall Street. But that appears to be directly contradicted by the record.

Regardless, the key point is nothing about the bailouts would have changed.

Would Iraq or Afghanistan be Different?

Would US troops still be in Afghanistan? You bet! Would US troops still be in Iraq? You bet! Would the US still be wasting money stationing troops in 140 countries? You bet!

McCain Supports Obama on Libya

Please consider McCain uneasy over Republican 'isolationism'

US Senator John McCain on Sunday expressed concern about growing isolationism in the Republican party, particularly among those vying for the 2012 presidential nomination.

"There's always been an isolation strain in the Republican party, that Pat Buchanan (a former Republican presidential contender) wing of our party. But now it seems to have moved more center stage, so to speak," he said.

There is no question that President Barack Obama, a Democrat, made the right choice in lending US military support to the NATO mission in Libya, McCain told ABC's "This Week" program.

McCain tries to differentiate on war policy but for all practical purposes McCain and Obama are twins.

Moreover, Obama promised "change you can believe in" but carried out similar economic policies and warmongering of president Push.

McCain on Balancing the Budget

Would McCain have balanced the budget? Hardly. We would have the same Senatorial impasse we have today.

Worse yet, the senator proposed a nonsensical plan in 2008 to Balance Budget by 2013.

In his proposal, Mr. McCain said he would hold overall spending growth to 2.4 percent a year. That is a tall order because federal spending has been growing an average of more than 6 percent a year in the last five years.

Mr. McCain said he would also slow the growth of Social Security, Medicare and Medicaid, and fiscal experts agree that he would need to do that to achieve his goal. But Mr. McCain did not give details of how he would alter those benefit programs, which have powerful constituencies, including older Americans, a huge health care industry and state and local government officials.

A longtime foe of pet projects known as earmarks, Mr. McCain said he would stop such spending. The Bush White House says earmarks this year total $17 billion, a comparatively small share of a $2.9 trillion budget.

Mr. McCain proposed a one-year freeze in most domestic spending subject to annual appropriations, "to allow for a comprehensive review." This proposal would affect education, scientific research, law enforcement and scores of other programs.

Would any of McCain´s proposals have done a thing to balance the budget? Only a fool would answer yes. So what would have changed regarding the budget? The sad answer is next to nothing.

Obamacare

To be fair, Obamacare would not have passed under McCain. However, it is also fair to point out Obamacare passed only because of a procedural move, and the Supreme Court may soon invalidate key provisions of that legislation.

Bailouts, Budgets, Warmongering

The sad state of affairs is that when it comes to the bailouts, budgets, and warmongering trifecta, things would not be much different under president McCain than we see right now under president Obama.

There are many reasons for this, but at the top of the list are campaign contributions from bankers, warmongers, homebuilders, etc, to candidates of both parties.

Does any candidate really want reform? The answer is "Yes, until they are elected and start receiving campaign contributions".

Fear of touching the "third rail" of messing too much with Medicare and Social Security is another piece of the puzzle.

Republicans do want to do something about public unions.

However, Republicans lack the votes or bargain the votes away in compromises to get other things they want. The result is "no progress" on something that would genuinely help: national right-to-work laws and scrapping of Davis-Bacon.

Senator Rand Paul had a proposal to balance the budget. It gathered 7 of 100 votes in the Senate. President Obama´s proposal gathered 0 out of 100 votes. Does anyone really want to do anything or do they just want to pretend they do?

I look at the Republican presidential candidates other than Ron Paul in dismay.

I see little hope in balancing the budget or getting out of Iraq and Afghanistan soon. I see nothing on campaign finance reform. I see nothing on reducing military spending. I see no structural reforms on pensions or public unions.

Most of all, I see how little it would have mattered if McCain won the last election or how any candidate other than Ron Paul promises genuine solutions about the mess we are in today.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Der Spiegel Claims Merkel-Sarkozy Agreement Has Collapsed; Bloomberg Reports Europe May Withhold Half of Greek Payment

Posted: 19 Jun 2011 12:02 PM PDT

Two interesting stories regarding Greece have hit the wires today. It´s difficult to know if they are related.

First, Der Spiegel claims the agreement negotiated between German chancellor Merkel and French president Sarkozy has collapsed; Second, Bloomberg reports Europe will pressure Greece by withholding half of the next tranche of money.

The pattern is for Eurozone officials and the IMF to deny Der Spiegel claims, only to find out later that Der Spiegel sources were impeccable.

Is it different this time?

Voluntary Rollover Plan Off the Table?

Please consider Germany 'dismisses Greek debt compromise plan'

A German compromise plan to resolve a dispute with the European Central Bank over the Greek rescue that was reported by Der Spiegel magazine is no longer on the table, a government source said Sunday.

Der Spiegel had reported ahead of its Monday issue that the German finance ministry called for a beefed-up version of Europe's temporary bailout mechanism lending to Greek banks to insure they have adequate collateral with the ECB.

It would boost the effective lending capacity of the Emergency Financial Stability Facility (EFSF) to 440 billion euros ($629 billion) and see member states double the amount of guarantees they provide the fund.

Germany's share of guarantees would climb to 246 billion euros from 123 billion euros, according to the report.

But a German official, who spoke on condition of anonymity, said that while "several options" were being debated to involve private creditors in an Athens rescue, the reported proposal was "no longer on the agenda".

The source added that the initial plan had differed from the reported proposal in "key aspects".

German officials say they seek a plan with as few "unwanted side effects" as possible.

Europe May Withhold Half of Greek Payment

Bloomberg reports Europe May Withhold Half of Greek Payment

European governments weighed withholding half of Greece's next 12 billion-euro ($17.2 billion) aid payment, seeking to keep the country solvent while maintaining pressure on the government to slash the debt that pitched the euro area into crisis.

Euro-area finance ministers may authorize only a 6 billion- euro loan to tide Greece through bond redemptions in July, while further aid hinges on Greek budget cuts, Belgian Finance Minister Didier Reynders said.

"We will in any case try to release the necessary funds for the short term," Reynders told reporters before a meeting of euro-area finance ministers in Luxembourg tonight.

Tonight's euro-area finance ministers' meeting coincided with the start of a three-day Greek parliamentary debate in Athens over a confidence vote in a new cabinet at what Papandreou called a "critical crossroads." Papandreou has 155 seats in the 300-seat parliament.

Germany, which as Europe's largest economy is the biggest guarantor of aid packages to Greece, Ireland and Portugal, insists on an "ambitious" economic overhaul in Athens, Finance Minister Wolfgang Schaeuble said.

"We will surely work on laying the groundwork for paying out the tranche," Schaeuble said. "It also depends on Greece making the necessary decisions with a fundamental consensus of the political parties so that we can be confident that Greece will live up to its commitments."

While Germany bowed to European Central Bank and French demands not to compel investors to buy new Greek bonds as old ones expire, the lines are blurry between a "voluntary" and "compulsory" rollover that would lead rating companies to declare Greece in default.

On the table are incentives for bondholders to maintain their exposure to Greece, said Luxembourg Prime Minister Jean- Claude Juncker, chairman of the talks. He ruled out an agreement tonight on a new three-year package for Greece, pointing to July for a "final and overall answer."

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

UK Banks Abandon Eurozone; Greek PM Seeks Constitutional Changes; Trichet Blames Everyone but Europe for Global Imbalances; Credit Crunch Coming Up?

Posted: 19 Jun 2011 05:40 AM PDT

The Telegraph reports liquidity dries up as UK banks abandon eurozone over Greek default fears

Senior sources have revealed that leading banks, including Barclays and Standard Chartered, have radically reduced the amount of unsecured lending they are prepared to make available to eurozone banks, raising the prospect of a new credit crunch for the European banking system.

Standard Chartered is understood to have withdrawn tens of billions of pounds from the eurozone inter-bank lending market in recent months and cut its overall exposure by two-thirds in the past few weeks as it has become increasingly worried about the finances of other European banks.

Barclays has also cut its exposure in recent months as senior managers have become increasingly concerned about developments among banks with large exposures to the troubled European countries Greece, Ireland, Spain, Italy and Portugal.

Moves by stronger banks to cut back their lending to weaker banks is reminiscent of the build-up to the financial crisis in 2008, when the refusal of banks to lend to one another led to a

seizing-up of the markets that eventually led to the collapse of several major banks and taxpayer bail-outs of many more.

While the funding position of UK banks is far stronger now than it was back in 2008, the banking systems of several other major European countries, including Spain, Germany and Italy, are showing increasing signs of weakness.

Analysts at UBS have warned that eurozone banks are "particularly exposed" having not done enough since the crisis to cut their reliance on the wholesale funding markets and remain acutely sensitive to the withdrawal of liquidity from the inter-bank market.

Simon Adamson, a banks analyst at CreditSights, said it was clear many eurozone banks had been having trouble funding themselves for several months.

Trichet Blames Everyone but Europe for Global Imbalances

Lately, every time ECB president Jean-Claude Trichet opens his mouth, something silly come out. Please consider Trichet warns of widening global imbalances

European Central Bank President Jean-Claude Trichet on Sunday raised concern about widening global imbalances after the financial crisis, calling them one of the main challenges for the economy.

He said the euro area does not contribute to global imbalances, pointing to projections by the International Monetary Fund which see the region's current account broadly balanced this year and up to 2015.

Trichet added: "The euro area has a significant stake in effective global rebalancing, notably through sounder domestic policies worldwide which, in turn, would contribute to global external stability."

The euro's international role underscores a high degree of stability, he added.

The Eurozone is at risk of imploding, Greece needs another bailout, Spain and Italy are on the brink of disaster, and we are to believe Europe is adding stability?

Greek PM Seeks Constitutional Changes

Yahoo Finance reports Greek PM calls for referendum on constitution

Greek Prime Minister George Papandreou called on Sunday for a fall referendum on "changes to the political system," including to the country's constitution.

Opening a three-day parliamentary debate that will culminate in a confidence vote late Tuesday, Papandreou blamed Greece's bloated and inefficient state sector for bringing the country to its knees and vowed to effect deep changes.

"I ask for a vote of confidence because we are at a critical juncture...the debt and deficits are national problems that have brought Greece into a state of (diminished sovereignty) that may have protected us from bankruptcy, but which we need to get out of," Papandreou said.

Papandreou told parliament Greece is also in talks for a new bailout package "roughly equal" to the first package agreed to in May 2010.

He said the original package's projection that Greece would be able to borrow from the markets in 2012 had been disproved, but said this was not the fault of his government, which had done all it was required to, passing painful measures and reducing the deficit as a percentage of GDP by 5 percent in 2010.

Instead, he blamed ratings agencies, tax havens, "derivatives speculators" and the media, which have spread panic and discouraged potential investors.

Opposition leader Antonis Samaras called for early elections and said Papandreou's referendum proposal was an evasive maneuver masking his inability to govern.

Blaming rating agencies and derivatives speculators for the mess Greece is in is exceptionally lame.

Papandreou is hanging on by a thread. If he fails the vote of confidence, this mess will become unglued in a hurry. I think that would actually be a good thing because the longer EU officials kick the can down the road, the bigger the systemic losses.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Taking the time to be a dad

Good morning,

I grew up without a father around. I was lucky enough to be raised by a wonderful mother who, like so many heroic single mothers, never allowed my father's absence to be an excuse for me to slack off or not always do my best. But I often wonder what it would have been like if my father had a greater presence in my life.

So as a father of two young girls, I've tried hard to be a good dad. I haven't always been perfect – there have been times when work kept me away from my family too often, and most of the parenting duties fell to Michelle.

I know many other fathers face similar challenges. Whether you're a military dad returning from deployment or a father doing his best to make ends meet for his family in a tough economy, being a parent isn't easy.

That's why my Administration is kicking off the Year of Strong Fathers, Strong Families. We're joining with dads across the country to do something about father absence. And we're taking steps to offer men who want to be good fathers but are facing challenges in their lives a little extra support, while partnering with businesses to offer fun opportunities for fathers to spend time with their kids. For example, the Association of Zoos and Aquariums, Major League Baseball and the WNBA are offering discounts for fathers and their kids, and companies like Groupon and LivingSocial will be featuring special offers for activities fathers can do with their children.

You can learn more and sign the Fatherhood Pledge at Fatherhood.gov:

We know that every father has a personal responsibility to do right by their kids – to encourage them to turn off the video games and pick up a book; to teach them the difference between right and wrong; to show them through our own example the value in treating one another as we wish to be treated. And most of all, to play an active and engaged role in their lives.

But all of us have a stake in forging stronger bonds between fathers and their children. All of us can support those who are willing to step up and be father figures to those children growing up without a dad. And that's what the Year of Strong Fathers, Strong Families is all about.

So I hope the dads out there will take advantage of some of the opportunities Strong Fathers, Strong Families will offer. It's one way of saying thank you to those who are doing the most important job of all: playing a part in our children's lives.

Happy Father's Day.

Sincerely,

President Barack Obama

P.S. Earlier this week, I did a TV interview and wrote an op-ed on this topic. You can see both on WhiteHouse.gov.

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Seth's Blog : Coordination

Coordination

Our economy is almost entirely based on a Darwinian competition--many products and services fighting for shelf space and market share and profits. It's a wasteful process, because success is unpredictable and unevenly distributed.

The internet has largely mirrored (and amplified) this competition. eBay, for example, not only pits sellers against one another, it also pits buyers. Craigslist makes it easy for buyers to see the range of products and services on offer, making the marketplace more competitive. Google, most of all, encourages an ecosystem where producers can evolve, improve and compete.

I think the next frontier of the net is going to use the datastream to do precisely the opposite--to create value by making coordination easier.

A pre-internet pioneer of this: the method residents are assigned to hospitals after med school (the Match). The competitive way to do this is the same way we do college--we tell students to apply to a ton of schools, and perhaps you get into four, perhaps you get into none. Perhaps someone else gets into your favorite and chooses not to go... while you're left behind.

The Match coordinates instead. You tell the system your favorites, in rank order, and it uses application feedback from the hospitals to maximize the happiness of the largest number of applicants. No sense wasting scarce acceptances on people unable to work in two places at once.

Consider the way Logos is determining which books to bring out. They challenge readers to indicate the most they'd be willing to pay for a particular title, and then, based on the number of people voting with their dollars, can bring out titles at the lowest possible price for the largest number of people.

In both cases, the system works because it can become aware of buyer preferences in advance. Kickstarter takes this to an extreme, allowing producers to pre-sell items before making them. But this is not nearly as nuanced as it could be, and a lot of effort is wasted in acquiring the attention of potential purchasers.

Any wasting asset--a restaurant table, a seat at a conference, a wasting box of fish--can be efficiently used instead of wasted if we use technology to identify and coordinate buyers.

Synchronizing buyers to improve efficiency and connection is a high-value endeavor, and it's right around the corner. It will permit mesh products, better conferences, higher productivity and less waste, while giving significant new power to consumers and those that organize them.

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sâmbătă, 18 iunie 2011

Mish's Global Economic Trend Analysis

Bin Laden "Halo Effect" Vanishes; U.S. Economic Confidence Plunges in Early June; Expectations Worsening
Brown Vetoes California Budget, Pledges to Move Heaven and Earth for Tax Hikes; Lawmakers Face Loss of Salary
Mad Scramble to Prevent the Unpreventable and Contain the Uncontainable

Bin Laden "Halo Effect" Vanishes; U.S. Economic Confidence Plunges in Early June; Expectations Worsening

Posted: 18 Jun 2011 03:17 PM PDT

A quick surge of optimism after Bin Laden was killed has completely vanished according to a recent Gallup Poll. Please consider U.S. Economic Confidence Plunges in Early June

A sharp deterioration in the jobs outlook and six straight weeks of Wall Street declines sent Americans' confidence in the U.S. economy plunging to an average of -35 during the week ending June 12 -- a decline of nine percentage points from two weeks ago, and six points worse than it was in the same week a year ago. Economic confidence is now approaching a 2011 weekly low.

Economic confidence reached its peak so far this year at -18 in February and then generally declined through the week ending April 24, when it reached -39 as gas prices surged and economic activity slowed. Economic confidence improved to -25 during the week after Osama bin Laden's death and coincident with the "rally effect" in President Obama's approval rating. However, Americans have become more pessimistic about the economy in early June, with confidence reverting to late April levels.

Economic Expectations Worsening

Thirty percent of Americans said the U.S. economy is getting better last week -- down from 37% during most of May and near the low for the year. This is five points below the reading for the same week in 2010.

Look for unemployment to rise as the economy spirals towards another recession.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Brown Vetoes California Budget, Pledges to Move Heaven and Earth for Tax Hikes; Lawmakers Face Loss of Salary

Posted: 18 Jun 2011 02:58 PM PDT

On Thursday, California Governor Jerry Brown vetoed a Democratic sponsored budget that used doubtful techniques to paper-over a $10 billion deficit. As a result, California legislators face a potential loss of salary.

Please consider Brown Vetoes California Budget Without Tax Extension

California Governor Jerry Brown vetoed a budget lacking the tax extensions he sought less than 24 hours after it was passed by the Democrat-controlled Legislature, continuing a stalemate over a $10 billion deficit.

Brown, a Democrat who pledged to solve California's fiscal malfunctions without gimmicks and accounting tricks, said the budget sent to him yesterday used legally suspect techniques to paper over the shortfall.

"The budget I have received is not a balanced solution," Brown said today in a statement. "It continues big deficits for years to come and adds billions of dollars of new debt. It also contains legally questionable maneuvers, costly borrowing and unrealistic savings. Finally, it is not financeable and therefore will not allow us to meet our obligations."

The veto means California, the biggest issuer of municipal debt in the U.S., faces the start of its fiscal year July 1 without a budget that would let the state borrow from Wall Street to pay bills. Democrats, who don't command enough votes to override Brown's veto, said it's now up to Brown to find a compromise with Republicans who oppose his tax plan.

Democrats were able to pass their plan with a simple majority, thanks to a November voter initiative that lowered the threshold from two-thirds. Lawmakers faced the loss of salary and per-diem pay for every day they failed to meet a June 15 deadline for passing a spending plan.

Controller John Chiang, who issues state paychecks, hasn't said whether the budget approved yesterday is enough to meet that requirement. The law's language requires legislators to send the governor a balanced budget; it doesn't say it must be enacted to clear that threshold.

"We clearly met the obligation to pass an on-time budget," Assembly Speaker John Perez, a Los Angeles Democrat, told reporters today.

Brown Pledges to Move Heaven and Earth

Please consider Brown Pledges to Seek Republican Tax Votes After Vetoing California Budget

California Governor Jerry Brown, who failed to win Republican support of tax extensions in six months of negotiations, said he'd "move heaven and earth" in another attempt after vetoing a budget lacking the provision.

Brown, a Democrat who pledged to solve California's fiscal malfunctions without gimmicks, didn't say how he'd get the Republican backing needed to pass his plan. His budget veto was the first in state history.

"I'm going to do everything I can, I'll move heaven and earth, to get those votes," Brown told reporters yesterday in Los Angeles.

Brown wants lawmakers to bridge the deficit by extending tax and fee increases that are set to expire June 30, to avert deeper spending cuts to schools and public safety. The governor needs to persuade at least two Republicans in each legislative chamber to back his plan before it can pass.

Without a budget by July 1, Controller John Chiang can't pay lawmakers or the more than 1,000 legislative workers and gubernatorial appointees. They would get any money owed once the spending plan is signed.

Chiang also can't pay vendors who sell goods and services to the state, or send subsidies to community colleges, health clinics, foster-care parents, nursing homes and daycare centers.

Republicans have jockeyed for concessions on spending levels, cuts to government pensions and business and environmental regulations in exchange for their support to put Brown's tax extensions on a statewide ballot.

"Californians deserve a budget that stands the test of time, and that requires the real reforms that they are demanding -- meaningful pension reform, a spending limit and business- regulation relief for job creation," said Senator Bob Dutton, the Republican minority leader from Rancho Cucamonga.

It will be interesting to see what Chiang rules on those paychecks. If legislators forfeit salaries, who will cave in first, Republicans or Democrats?

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Mad Scramble to Prevent the Unpreventable and Contain the Uncontainable

Posted: 18 Jun 2011 10:08 AM PDT

EU and ECB officials are scrambling like fools to come up with a "voluntary" solution to the Greek problem that will not trigger a default and spread contagion.

Please consider Juncker warns of contagion

Contagion from the Greek debt crisis could spread to at least five other European countries - including Belgium or even Italy - if it is not cautiously managed, the head of the eurozone group warned Saturday.

Jean-Claude Juncker told the German daily Sueddeutsche Zeitung that demanding that private creditors contribute to the next Greek bailout package could be considered a "default" by ratings agencies - and that would have extreme consequences for Europe as a whole.

Juncker, the prime minister of Luxembourg who also chairs the 17 eurozone finance ministers, was quoted as saying that a Greek bankruptcy "could prove contagious for Portugal and Ireland, and then also for Belgium and Italy because of their high debt burden, even before Spain."

"We are playing with the fire," he told the paper.

His comments came a day after Moody's warned it may reduce Italy's Aa2 credit rating over concerns about the country's ability to increase growth and reduce its public debt, one of the highest in Europe. The warning followed a similar move by Standard and Poor's, which cut its ratings outlook for Italy's debt from stable to negative.

European officials will hold talks with the private sector - mostly banks, insurance companies and pension funds - and they will make a "substantial contribution" to a second bailout for Greece, Merkel said, according to the news agency DAPD.

But neither Merkel nor German Finance Minister Wolfgang Schaeuble have given an estimate of the private sector contribution they hope to achieve. Schaeuble told the German daily Boersen Zeitung the contribution must be "substantial, measurable and reliable" so that the burden of a new Greek aid package does not fall solely on taxpayers.

Juncker stressed that cutting spending and raising taxes alone was unable to revive Greece's economy, and called for a loosening of EU rules to give Greece more direct financial assistance for investments that would spur growth.

Contagion is Certain

The EU is too late. Containing the uncontainable is impossible. Contagion is a certainty.

"Substantial Contribution" Nonsense

Merkel does not want the burden to fall solely on taxpayers, instead wanting banks to contribute an undefined "substantial" sum.

Why should taxpayers contribute anything? Taxpayers did not created this mess. Taxpayers did not force banks to lend to Greece. Taxpayers did not stuff their balance sheets with Greek debt.

Taxpayers did not want the ECB to buy Greek and Irish debt. Taxpayers had no say in letting Greece join the EU.

Can-Kicking Concoction

It will be interesting to see what the rating agencies say about the solution the can-kickers concoct this weekend because it is virtually impossible to structure a debt rollover in a voluntary way.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

duminică, 19 iunie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Taking the time to be a dad

Seth's Blog : Coordination

Coordination

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sâmbătă, 18 iunie 2011

Mish's Global Economic Trend Analysis

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duminică, 19 iunie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Taking the time to be a dad

Seth's Blog : Coordination

Coordination

More Recent Articles

sâmbătă, 18 iunie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Pagini

Persoane interesate

Arhivă blog

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