“Americans are beginning to feel the pinch from Washington’s decision to embrace austerity measures aimed at bringing down the nation’s budget deficit.
Paychecks across the country have shrunk over the last week due to higher federal tax rates, and workers are already cutting back on spending, which will drag on the economy this year.”
“It’s clear the White House is moving on, that financial reform is no longer a priority – and yet the financial system is really no more secure than it was when Tim Geithner took over in the dark days of 2009. It’s not flailing and gasping for air, but that doesn’t mean it’s suddenly safe.
In the immortal words of Chicago mayor Rahm Emanuel, “You should never waste a good crisis.” Unfortunately, it looks like America did.”
“Damning official report on US health finds death and disease taking huge toll on population, particularly among young
The US is, however, good at looking after the health of the most elderly. People who reach 75 are more likely to live longer, have lower death rates from stroke and cancer, better-controlled blood pressure and cholesterol levels and lower rates of smoking than elsewhere”
“the U.S. health care system provides less quality and less value compared to its international counterparts.
The New York Times recently published an article that discusses the results of a comprehensive study convened by the Institute of Medicine and the National Research Council on mortality rates and other measures of health care.”
“The only real way to have leverage with the debt ceiling is to convince people that we are not going to default on our debt,” Paul said. “We could actually direct the President to pay our interest, make Social Security payments, pay soldier salaries, the basic functions that could keep government going. That way we take default off the table. They always scare us into raising the debt ceiling by saying that the stock markets will tank, everyone will go crazy if we default. I don’t think we should default — but I don’t think we should raise the debt ceiling either”
“From a constitutional perspective, this approach is preferable to outright default, because it would ensure that the 14th Amendment’s basic promise is kept. It is likewise constitutionally preferable to unilaterally ignoring the debt ceiling, because it does not entail the presidential usurpation of a power specifically committed to the legislative branch. Apart from the technically legal but wildly unrealistic device of minting a trillion-dollar platinum coin, prioritization is the approach that does the least violence to the Constitution.”
“in 1996 something remarkable happened. Over the objections of a Democratic administration Republicans in Congress passed a statue, 31 USC 5112(k), permitting the issuance of platinum numismatic coins. The astonishing part was that Congress set no specific denomination, writing perhaps the biggest blank check in history.
Since the Federal Reserve buys coins at face value, this gave the Secretary of the Treasury the power to create debt-free money at will.”
“We are only two weeks in to 2013 and there is plenty of time for far more embarrassing financial columns to be written, but The Guardian’s financial editor, Heidi Moore, has opened up an early lead in the competition. Moore’s column represents five embarrassing elements. She entitled her piece: “’Mint the coin’: why the platinum coin campaign doesn’t even work as satire.””
“Federal Reserve officials have told Steve Liesman that in connection with past budget crises, the Fed determined that it would not provide credit to the Treasury in the event that the government’s bank accounts hit zero. Treasury officials, speaking on condition of anonymity, told me in 2011 that the Treasury won’t cut checks if it believes it doesn’t have the funds to pay for them.
In other words, if there is no deal there is at least a non-zero chance that we’re going to default on our debt. This might not be anyone’s ideal outcome. It may not be anyone’s current plan. It may be suboptimal for everyone involved. But saying an outcome is undesirable for all parties is not the same as saying it is impossible. Think prisoner’s dilemma.”
“while the platinum coin option expands the Fed’s balance sheet and, ultimately, the monetary base, it has no implications for inflation, even if the Treasury never buys back the coin.
But while the economic consequences for the Fed are benign, the political consequences are not. As I noted earlier, the Fed buys coins in response to demand from commercial banks (the process is explained here). Banks won’t want a $1 trillion platinum coin, so the Fed will only buy the coin if Treasury forces it to. The Treasury, in “depositing” its coin at the Fed, is in reality ordering the Fed to print money. And if Treasury doesn’t take the coin back, the money stays printed. “
“Printing money will always be exactly as inflationary as issuing short-term debt, because short-term government debt and reserves at the Fed will always be near-perfect substitutes. In the relevant sense, we will always be at the zero lower bound. Yes, there will remain an opportunity cost to holding literally printed money — bank notes, platinum coins, whatever — but holders of currency have the right to convert into Fed reserves at will (albeit with the unnecessary intermediation of the quasiprivate banking system), and will only bear that cost when the transactional convenience of dirty paper offsets it. In this brave new world, there is no Fed-created “hot potato”, no commodity the quantity of which is determined by the Fed that private holders seek to shed in order to escape an opportunity cost. It is incoherent to speak, as the market monetarists often do, of “demand for base money” as distinct from “demand for short-term government debt”. What used to be “monetary policy” is necessarily a joint venture of the central bank and the treasury. Both agencies, now and for the indefinite future, emit interchangeable obligations that are in every relevant sense money.”
“one side effect of the zero bound is the blurring of what many thought were sharp lines between fiscal and monetary authorities. “
“Shows how silly the political game has gotten that the only way to respond is by using sillier ideas. There’s nothing wrong the system that we should have today, but don’t (mainly because those elected are not really looking out for what benefits the majority). For example, the GOP likes to pledge itself as the “anti-tax” party while the Democrats like the view themselves as the “Middle class” party. Well, where the hell were they both when the payroll tax cut expired when we went over the “fiscal cliff”. Both parties should have gotten together and not only extended that, but also possibly even make it bigger (as it is not only a tax but also helps the middle class). Instead, they acted like a bunch of silly geese (I’d use other words here but I want to keep my blog “clean & professional”) and looked out for their own behinds/public image.”
“The budget deficit for quarter—the last of the calendar year but the first of the federal government’s fiscal year—totaled $292.37 billion, down from $321.74 billion during the same period a year earlier, the Treasury Department said in its monthly report.
The budget deficit for December totaled $260 million, compared with an $85.97 billion shortfall during the same month a year earlier. That was the best December result since 2007.”
“Americans give Congress a 14% job approval rating as the new year begins, the lowest since September of last year and down from 18% in November and December. The disapproval rating for Congress is 81%.”
“Euro-zone industrial output declined the most in three years in November, pulled lower by countries in the region’s south facing recession as they attempt to cut debt and deficits through austerity policies.
The decline is a further indication that the wider economy could contract for a third consecutive quarter in the final three months of 2012 as fiscally frail countries struggle with still-high borrowing costs and demand for goods suffers amid continuing job cuts.
Output dropped 3.7% from a year earlier, the biggest decrease since November 2009, when output slumped 7%”
This is complete rubbish. Barroso doesn’t understand the situation. It’s clear in Ireland and Spain that it had nothing to do with public debt. It was private debt that accumulated in an untenable monetary union.
“”I want to make this clear because there is a myth that it is the European Union that imposes difficult policies. It’s not true,” Mr Barroso said.
“The cause of the difficulties some countries are facing is excessive public debt created by national governments and irresponsible financial behaviour, that also accumulated excessive private debt including financial bubbles that happened under the responsibility of national supervisors,” he added.”
“The reforms had to be legislated ahead of Monday’s regular meeting of economic experts from the eurozone member states and Wednesday’s board meeting of the International Monetary Fund to approve a €3bn loan disbursement to Athens, he said.
Parliamentary approval of the tax measures, together with an immediate increase in household electricity prices, are key conditions for Athens to receive the next aid tranche. The state electricity monopoly PPC is set to announce a 10 per cent tariff rise on Monday, the first of three this year.”
“Berlin bends over backwards to reassure Europe that it has no desire for domination. But its championing of misguided fiscal orthodoxy is dragging the whole continent down”
“Could Sweden or Finland be the scene of the next European financial crisis? It is actually far likelier than most people realize. While the world has been laser-focused on the woes of the heavily-indebted PIIGS nations for the last couple of years, property markets in Northern and Western European countries have been bubbling up to dizzying new heights in a repeat performance of the very property bubbles that caused the global financial crisis in the first place.”
“The latest opinion poll published on Wednesday showed that Ms Merkel’s conservative Christian Democrat bloc has stronger support than at any previous time since she became chancellor in 2005, with 42 per cent backing either her Christian Democratic Union or its Bavarian sister party, the Christian Social Union.”
“The latest unemployment rate for Greece has risen to 26.8%, the highest figure recorded in the European Union (EU).”
“The UK economy contracted by 0.3% in the last three months of 2012, according to the National Institute of Economic and Social Research (NIESR).
The NIESR blamed it on artificially strong growth in the third quarter.
If the figure is confirmed by official data later this month, it will mean that the economy returned to growth for only a single quarter.
It would also mean the economy saw zero growth for the whole of 2012.”
“The bulk of the spending package will go to supporting industrial revitalisation and reconstruction from Japan’s March 2011 earthquake and tsunami disasters. It also includes plans to raise military spending by 100 billion yen from the 4.6 trillion yen budget last year, the first such increase in a decade.
The increase is partly aimed at beefing up monitoring and defences around islands in the East China Sea, known as the Senkakus in Japan and the Diaoyu islands in China, that are the focus of a territorial dispute.”
“The Japanese government has approved a fresh 10.3 trillion yen ($116bn; £72bn) stimulus package in an attempt to spur a revival in its economy.
The package will include infrastructure spending, as well as incentives for businesses to boost investment.
Tokyo estimates that the stimulus will boost Japan’s economy by 2% and create 600,000 jobs.”
“Beijing was blanketed in a thick, foul-smelling layer of hazardous smog over the weekend that pushed air quality readings well off the charts and prompted environmentalists to call it the worst air pollution on record in the city.
The air quality in China’s capital, home to about 20m people, was consistently designated as hazardous by both the Chinese government and a monitoring station maintained by the US embassy throughout the weekend and people were advised not to go outside.”
“Beijing ordered government vehicles off the city’s roads as part of an emergency response plan to ease pollution smothering China’s capital for the past three days, while warning the smog will persist until Jan. 16.
Hospitals were inundated with patients complaining of heart and respiratory ailments and the website of the capital’s environmental monitoring center crashed.”
“World-wide personal-computer shipments dropped 6.4% during the fourth quarter of 2012, despite the much-anticipated debut of a new operating system from Microsoft Corp., an event that’s boosted PC sales in the past.”
“Sales of personal computers that run on Microsoft’s new Windows 8 operating system have been lacklustre.
Jay Chou, a senior research analyst at IDC, said computer makers’ efforts to clear their inventory of products running on Windows 7 in the third quarter “did not significantly boost the uptake of Windows 8 systems in the fourth quarter”.
Lenovo, which operates in more than 160 countries, shipped a record 14.1 million personal computers in the past quarter for a new high of 15.7 per cent global market share. For the full year, it gained a 14.9 per cent market share with sales of 52.4 million.
Despite that positive performance, IDC said Lenovo’s gains were “significantly smaller than several quarters ago when the company was besting market growth by nearly 30 per cent”.”
“The Chinese computer maker, which is known for its ThinkPad personal computers, is working its way toward the American consumer market with what it says is a thoughtful, if slow, approach that will culminate in the company’s first high-end PCs for U.S. buyers later this year.”
This is good news for Nokia but their platform using Microsoft still has no chance of competing with Apple’s or Google’s.
“Record demand for flagship smartphones means Nokia’s handset business is forecast to break even or move into profit after three straight quarters of losses”
“Recent rumours claimed that the successor of LG Nexus 4 will sport a powerful 2GHz quad core processor and upcoming Android Key Lime Pie OS.
The Google-LG Nexus 4 boasts a 4.7 inch screen display with 1280×768 resolution, 1.5GHz Snapdragon S4 Pro quad-core processor, 8 MP camera and 2100 mAh battery.”
“Reuters issued an update Friday morning informing readers that it had withdrawn the story, which featured the headline “Apple exec dismisses cheaper iPhone as a market share grab — report.” It was based on a report from the Shanghai Evening News, but that original story was later updated with “substantial changes to its content,” which prompted the significant retraction.”
“In a revised version of an interview published Thursday in a Chinese newspaper, Apple Inc marketing chief Phil Schiller said the company would focus on making “the best products” for customers and “never blindly pursue market share.”
On Thursday, the Shanghai Evening News cited Schiller as saying that Apple would not develop a cheaper smartphone for the sake of expanding its market share.
That appeared to undermine other recent media reports indicating that Apple was working on a low-end smartphone, which would represent a significant shift in strategy for a company that has always focused on premium products.”
“Preliminary PC shipment estimates released on Thursday from market research firm IDC show an overall contraction of 4.5 percent year-over-year in the fourth quarter of 2012, and Apple followed suit with a 0.2 percent negative growth rate.”
“Apple’s iPad lineup is now on a twice-a-year refresh cycle, according to a new rumor, which pegs both the full-size iPad and iPad mini as due for updates in March.”
“Apple Inc has almost halved its order with suppliers of LCD panels for the iPhone 5 in the current quarter due to weak demand, the Nikkei reported on Monday.”
“While Verizon Wireless and AT&T Inc. have benefited from the rapid adoption of smartphones, as that growth slows the carriers are directing customers to other devices that connect to the network, such as those that control a home energy’s use.
The move is meant to increase the carriers’ reach into customers’ lives, enabling the company to sell buckets of data and making it harder for subscribers to switch providers.”
“Swartz was a computer prodigy who designed his first website at age 13 — and dropped out of high school after just one year. At 14, he helped write the RSS program that alerts users to new blog posts.
He later co-founded the social news website Reddit, enjoying a financial windfall in 2006 when it sold to Conde Nast’s Wired Digital.”
““Aaron’s death is not simply a personal tragedy,” his family wrote in the statement. “It is the product of a criminal justice system rife with intimidation and prosecutorial overreach. Decisions made by officials in the Massachusetts U.S. Attorney’s office and at MIT contributed to his death.””
“This morning, Amazon.com launched a new service called AutoRip that allows buyers of certain music CDs to automatically receive access to downloadable MP3s of the album via Amazon’s Cloud Player. But the most interesting feature is that it will convert any qualifying CD you’ve purchased on Amazon since 1998.”
“CNET, a massive tech site that sent 90+ editors to CES this year, is owned by CBS. And CBS is currently involved in a lawsuit against Dish for a version of the Hopper DVR announced last year (one feature of the Hopper, called PrimeTime Anytime, records all broadcast channels at once, continuously, allowing viewers to skip all advertising). CBS Broadcasting and CBS Interactive, which operates CNET, are in different divisions of the company. Nonetheless, when CNET editors chose the Dish on its merits, the CBS mothership told them they couldn’t. The publication has defended the choice, citing its narrow effect (only reviews, only specific products) but the wall has still been breached”
“Saudi Arabia’s drive to build new refineries means its maximum capacity to export crude, the big gun it aims at other producers wanting higher oil prices, is set to decline over the next five years.
Major oil importers are not alarmed, as actual Saudi crude exports are well below their maximum and because more US and Iraqi crude will become available. But India’s refining industry has reason to worry about the emergence of a rival processing more than a million barrels a day.”
“There has been no official announcement but Saudi Arabia’s effective target for oil prices appears to have risen from $100 to $110 per barrel, based on recent changes in the kingdom’s production levels. “
“Armstrong, 41, plans to say he used performance-enhancing drugs without giving any detail on specific cases and events, USA Today said, citing the person. Armstrong has repeatedly denied using drugs to further his cycling career.”
Unlike the VIX, this is not necessarily a contrary indicator. But with Europe in recession, the UK going into recession and the US staring at the deficit ceiling problem, it’s hard to understand why we are in the midst of a secular bull market rather than just a cyclical bull run.
“The FTSE All-World equity index rose 0.9 per cent to 230.55, a 19-month peak. In London, the FTSE 100 pared earlier gains to close marginally higher, but still ended above the 6,100 mark for the first time since May 2008.”
This was the state as of Wednesday. I see it as a bad sign, a contrary indicator.
“Wall Street’s “fear index” has tumbled to a fresh 5½-year low as investors turn increasingly positive on the outlook for global stock markets.
The Vix index tracks investor expectations of market volatility revealed in the pricing of options that protect against violent moves on the S&P 500. As money managers typically seek protection against sharp share declines, the Vix is considered a gauge of how fearful investors are.”
“Mike Gooding, head of Reading university’s School of Agriculture, raised concerns this week about the possible impact of high rainfall on the flavour and nutritional value of food. He identifies two particular problems.
One is that continuous downpours wash essential chemicals, such as nitrogen compounds and trace minerals, out of the soil. Plants therefore take up fewer of these nutrients and incorporate fewer in the edible parts harvested for human consumption.
The second problem is that less sunshine reaches the leaves and fruit during wet weather. So biochemical reactions requiring bright light – which produce starch, sugars and flavour compounds – proceed more slowly.”
“Let’s assume you’re buying a used iMac off Craigslist. The seller has it listed for $1200. That seems like a lot to you, so you offer them $950 (about 20 percent less than they’re asking). From there, you might haggle up to a $1,000, but chances are they’ll take the $950. Why? Because in the case of Craigslist, many sellers list their items for around 15-20 percent more than they’d take for them.”