‘Recessions can hurt, but austerity kills’ | Politics | The Guardian
“In a powerful new book, The Body Economic, Stuckler and his colleague Sanjay Basu, an assistant professor of medicine and epidemiologist at Stanford University, show that austerity is now having a “devastating effect” on public health in Europe and North America.
The mass of data they have mined reveals that more than 10,000 additional suicides and up to a million extra cases of depression have been recorded across the two continents since governments started introducing austerity programmes in the aftermath of the crisis.
In the United States, more than five million Americans have lost access to healthcare since the recession began, essentially because when they lost their jobs, they also lost their health insurance. And in the UK, the authors say, 10,000 families have been pushed into homelessness following housing benefit cuts.
The most extreme case, says Stuckler, reeling off numbers he knows now by heart, is Greece. “There, austerity to meet targets set by the troika is leading to a public-health disaster,” he says. “Greece has cut its health system by more than 40%. As the health minister said: ‘These aren’t cuts with a scalpel, they’re cuts with a butcher’s knife.'””
HSBC to cut up to 14,000 jobs in bid to save US$3-billion | FP Street | News | Financial Post
“From next year HSBC, which had a common equity Tier 1 ratio of 10.1% in the first quarter, will seek to keep that gauge at more than 10% under new capital rules set by the Basel Committee on Banking Supervision. That compares with a target of 9.5% to 10.5% previously.
Return on Equity
HSBC is keeping its goal of return on equity, a measure of profitability, at 12% to 15%. It was 8.4% in 2012. The bank’s so-called core units already achieve return on equity within the target, Gulliver said.”
Student Debt and the Crushing of the American Dream – NYTimes.com
“A CERTAIN drama has become familiar in the United States (and some other advanced industrialized countries): Bankers encourage people to borrow beyond their means, preying especially on those who are financially unsophisticated. They use their political influence to get favorable treatment of one form or another. Debts mount. Journalists record the human toll. Then comes bewilderment: How could we let this happen again? Officials promise to fix things. Something is done about the most egregious abuses. People move on, reassured that the crisis has abated, but suspecting that it will recur soon.
The crisis that is about to break out involves student debt and how we finance higher education. Like the housing crisis that preceded it, this crisis is intimately connected to America’s soaring inequality, and how, as Americans on the bottom rungs of the ladder strive to climb up, they are inevitably pulled down — some to a point even lower than where they began.”
Feds reveal the search warrant used to seize Mt. Gox account | Ars Technica
“The Department of Homeland Security is investigating Mt. Gox, the largest Bitcoin exchange, for violating laws on US money exchange and money transfers—and it’s grabbing the exchange’s money in the process.
DHS officials refused to comment on the ongoing investigation, but they did provide a copy of the warrant that was used yesterday to seize funds that Mt. Gox had in Dwolla, a money transfer service. Dwolla is a Des Moines, Iowa company that provides one of the most popular ways to move US dollars to Mt. Gox, where they can be used to buy bitcoins.”
“The real European news today should, though, focus not so much on France, and certainly not alone, but on the dire state of the eurozone and broader EU economies. And this has no correlation with the formal political orientation of the government (centre-left, centre-right or whatever).
There is now a group of 10 EU states, not including France or the UK, who have experienced an annual fall in GDP for each of the past four quarters. This “Austerity A10 Club” includes the usual southern Europe list of Greece, Spain, Italy, Cyprus and Portugal. But it also includes two central European countries – the Czech Republic and Hungary – and the northern bloc of Belgium, Finland and the Netherlands – the land of Jeroen Dijsselbloem, Dutch finance minister and chair of the Eurogroup finance ministers, fresh from the Cyprus bailout “triumph”.”
For Japan lenders, Abenomics’ pain comes first, gain later | Reuters
“Bank executives have said the BOJ’s ultra-easy monetary policies are likely to exert further pressure on their lending margins.
Growth in outstanding loans by Japan’s major banks turned into positive territory in December after 37 straight months of contraction, but that increase has not been strong enough to make up for low interest rates.
Against that backdrop, the banks have been stepping up acquisitions overseas.”
Analysis: For all the debt, there’s a shortage of bonds | Reuters
“With governments awash with debt and furiously selling new securities to fund bloated budget deficits, the idea of a bond shortage on the marketplace may sound puzzling.
Yet not only is “quantitative easing” by the world’s major central banks sucking benchmark bonds out of the system, new regulations to strengthen banks and derivatives markets that effectively ring-fence bond holdings at commercial banks has raised concerns about a lack of bonds to lubricate the system.”
Spanish banks face fresh hit from bad loans – FT.com
“Spanish banks are bracing themselves for a fresh financial hit, amid rising pressure from the Bank of Spain on lenders to write down the value of their €200bn portfolio of restructured loans to the country’s troubled companies and struggling households.
The move is likely to trigger a further rise in bad loan ratios across the system and reduce earnings at a time when most Spanish banks are already suffering from low profitability. Analysts believe the crackdown could also shine a harsh new light on the capital position of some of the weaker banks, forcing them to sell assets to avoid the need to raise fresh capital.”
Japan’s banks lower sights as Abenomics squeezes JGB trading – FT.com
“Banks have for years counted on income from JGB trading to supplement the poorly paid business of lending to companies. Japan’s corporate sector is flush with cash and – given the country’s weak growth – has little need for new factories or equipment in any case. When companies do turn to banks for funds, it is at rates so low as to make the loans barely profitable.
Mr Kuroda in effect took the JGB business away from banks last month. As part of an effort to end Japan’s prolonged deflation, the Bank of Japan doubled the amount of bonds it buys each month – mopping up about 70 per cent of new issuance from the government. That has led to a collapse in trading volumes and, in effect, squeezed private financial institutions out of the market.”
Wholesale Prices Drop as Energy Costs Continue to Fall – WSJ.com
“U.S. manufacturing stalled in April, exposing a soft spot in the slow economic recovery.
Negative reports from U.S. industry are souring more-upbeat news in April from the more consumer-focused parts of the economy, including in the labor market, housing and retail sales. The stagnation in manufacturing could renew concerns that the U.S. is experiencing a spring slowdown that threatens the recovery from the 2008 financial crisis.
Manufacturing output dropped 0.4% in April, the biggest fall in six months, the Federal Reserve said Wednesday. A separate survey from the New York Fed indicated declining manufacturing in the state in May.”
Bad loans swell as China economy slows | South China Morning Post
“Loans overdue at least three months grew 6.8 per cent to 526.5 billion yuan (HK$665.2 billion) in the first quarter, with the non-performing loan ratio climbing to 0.96 per cent at the end of March from 0.95 per cent last year, the China Banking Regulatory Commission said yesterday.
While the mainland’s economic growth slowed to 7.7 per cent in the first quarter, banks are faced with mounting default risks in relation to loans to exporters, local government financing vehicles, real estate developers and industries that are saddled with overcapacity problems such as steel makers and cement producers.”
AP phone records seizure reveals telecom’s risks for journalists : Columbia Journalism Review
“Digital technologies do more than just make highly detailed information about our communications retrievable, however. Fakhoury says these same technologies also make it easier for the government to obtain the subpoenas for that information.”
Heroic Spain is damned if it does, and damned if it doesn’t – Telegraph
“Data released on Wednesday shows that Euroland is in even an deeper double-dip recession than feared, with the risk of a Japanese-style slump stretching on for years. There was no outside shock to explain this relapse. It was caused by policy error, and those policies have not been corrected.
If Euroland sticks to its grim path of synchronized contraction on all fronts – fiscal, monetary and bank deleveraging – and if it continues to impose all the burden of intra-EMU adjustment on the deficit states in a replay of the early 1930s, then it will push Spain, Portugal and others over a cliff.”
S&P says Cypriot deposit grab may set euro zone precedent | Reuters
“”We believe that the events in Cyprus highlight the increased reluctance of financially stronger euro zone countries to make their taxpayers’ funds available to recapitalize banks outside their home jurisdictions,” the ratings agency said in a report.
“For this reason, although the key features of the Cypriot banking system are not shared by other euro zone countries, we consider that the bail-in may indeed create a precedent.””
Argentine Courts Deal Kirchner a Setback – WSJ.com
“Argentine President Cristina Kirchner’s attempt to silence criticism of her economic data hit a setback this week after courts overturned hefty fines the government levied against economists who published their own inflation estimates.
Argentines have used private sector forecasts for almost six years in what many say is the absence of credible government data on inflation, which economists say easily surpasses 20%. That has led to increasingly tense wage talks between unions and employers.
The government fined about a dozen economic consulting firms as much as 500,000 pesos ($95,500) each for allegedly trying to mislead consumers by publishing inflation data that was considerably higher than the official Consumer Price Index. Critics of the Kirchner administration have decried the fines as an attack on free speech.”
Homeland Security seizes funds at main Bitcoin exchange — Tech News and Analysis
“The US Government has taken its most serious action yet against the popular cyber-currency Bitcoin by shutting down transfers between payment provider Dwolla and a Japanese exchange where the currency is traded.”
Do I Really Need to Take a Multivitamin?
“We all want a simple diet, but unfortunately those two things rarely match up. Although multivitamins can provide health benefits, they can cause problems as well. Ultimately you should speak with your doctor or a registered dietician about any significant health choices you make, but we spoke to Dr. Carly Stewart, medical expert at Money Crashers, to get some general advice.”
Human stem cells created by cloning : Nature News & Comment
“Breakthrough sets up showdown with induced adult lines.”
Angelina Jolie’s Disclosure Highlights a Breast Cancer Dilemma – NYTimes.com
“Breast cancer experts and advocates applauded the manner in which Ms. Jolie explored her options and made informed decisions, saying it might influence some women with strong family histories of breast cancer to get genetic tests.
But some doctors also expressed worry that her disclosure could be misinterpreted by other women, fueling the trend toward mastectomies that are not medically necessary for many early-stage breast cancers. In recent years, doctors have reported a virtual epidemic of preventive mastectomies among women who have cancer in one breast and decide to remove the healthy one as well, even though they do not have genetic mutations that increase their risk and their odds of a second breast cancer are very low.”
“Water shortages put a brake on economic growth”
BBC News – Japan’s Nikkei passes 15,000 for first time since 2008
“Japanese shares have climbed past the 15,000 mark for the first time since January 2008, as the yen continues to weaken – boosting the earnings potential for exporters.
On Wednesday, the benchmark Nikkei index rose 2.3% to 15,096, with carmaker Toyota and electronics giant Sony leading the gains.
The Nikkei is up 46% since the start of 2013.”
World’s Worst Bonds Brace for Losses on Abe Growth: Japan Credit – Bloomberg
“Five-year credit-default swaps to insure Japan’s sovereign bonds were at 55 basis points yesterday after falling to 54 on May 13, the lowest since November 2010, according to data provider CMA, which is owned by McGraw-Hill Cos. and compiles prices quoted by dealers in the privately negotiated market.
The drop suggests there’s little concern in the market about the government’s finances even as public debt will probably expand to 245 percent of GDP this year, according to the International Monetary Fund’s estimate.”
Dell to Miss Profit Estimates, Beat on Revenue – WSJ.com
“Signs of further deterioration in the computer maker’s profits could help bolster the $24.4 billion effort to take the company private, in a deal led by private-equity firm Silver Lake Partners and Michael Dell, the company’s founder and chief executive. The buyout has faced opposition from some of Dell’s largest stockholders.”
Yahoo to ramp up marketing to woo younger users, says CFO | Reuters
“Yahoo is trying to reverse a multi-year decline in revenue and user engagement on its website, amid competition from new social networking and mobile websites such as Facebook Inc and Twitter, and from search giant Google Inc.
“One of our challenges is we have had an aging demographic, if you will,” said Goldman.”
Did the IRS illegally target the Tea Party? Seven questions answered. – CSMonitor.com
“The IRS is under investigation for illegally targeting the Tea Party and other conservative groups. Steuerle offers answers to seven basic questions about the IRS Tea Party scandal.”
Analysis: Amazon gets help to lure big business to the cloud | Reuters
“As Amazon.com Inc seeks to transform itself into a leading provider of technology to the world’s largest corporations, it’s discovering that it needs help.
The online retailer, which since 2006 has moved aggressively into the business of renting remote computing, storage and other IT services, is roping in thousands of consulting and technology partners, from Cap Gemini SA to BMC Software Inc, in a major push to woo big-spending corporate customers to its cloud computing division.”
Mark Carney will follow the Fed, not the Bank of Japan | Gavyn Davies
“Until now, the BoE has avoided any form of forward guidance on the grounds that its credibility would be damaged if it were to offer promises which it could not fulfill when the time came. I have always been sympathetic to this objection but both the Chancellor and the new Governor seem impressed with what the Fed has achieved by using this weapon. It would be surprising if a majority of the MPC chose to block the incoming Governor’s intentions, knowing that the Chancellor could ultimately override them on the mandate if he really wanted to [2].
In summary, Mr Carney does not have the scope to repeat the Kuroda game changer, but he can follow the Fed.”
No Benefit Seen in Sharp Limits on Salt in Diet – NYTimes.com
“In a report that undercuts years of public health warnings, a prestigious group convened by the government says there is no good reason based on health outcomes for many Americans to drive their sodium consumption down to the very low levels recommended in national dietary guidelines.”
Vital Signs Chart: Nearly $1 Trillion in Student Debt – Real Time Economics – WSJ
“Americans are continuing to borrow more for college. In the first quarter of 2013, consumers owed $986 billion in student loans, up $20 billion from $966 billion in the fourth quarter. Student-loan balances outstanding have soared 70% in the past five years because of rising tuition costs and a weak job market that has prompted many Americans to seek refuge in higher education.”
There is no sovereign debt crisis in Europe | MacroScope
“Why has the crisis become conflated with a government debt problem in the public imagination? According to Blythe, this is a convenient way for Wall Street to again saddle the state with massive banking sector losses.
The cost of bailing, recapitalizing, and otherwise saving the global banking system has been, depending on how you count it, between 3 and 13 trillion dollars. Most of that ended up on the balance sheets of governments as they absorb the costs of the bust, which is why we mistakenly call this a sovereign debt crisis when in fact it is a transmuted and well-camouflaged banking crisis.”
Plosser on the Exit – Tim Duy’s Fed Watch
“Bottom Line: While the Fed is moving closer to tapering asset purchases, timing remains an issue. I think that most policymakers will not be swayed to an early end by the “Fed’s inflation credibility is at risk” argument. But a subset is likely swayed by the “financial stability is at risk” argument. And another subset may be swayed by the “communications credibility is at risk argument” that is an element of Plosser’s speech. In short, the majority favoring continuing asset purchases at the current pace is obviously shrinking. Hopefully this week’s upcoming speech by Federal Reserve Chairman Ben Bernanke and the release of the minutes from the last FOMC meeting will help clarify how quickly that majority is loosing ground.”
Behind the Curtain: D.C. turns on Obama – POLITICO.com
“The town is turning on President Obama — and this is very bad news for this White House.
Republicans have waited five years for the moment to put the screws to Obama — and they have one-third of all congressional committees on the case now. Establishment Democrats, never big fans of this president to begin with, are starting to speak out. And reporters are tripping over themselves to condemn lies, bullying and shadiness in the Obama administration.”
Factory sales fall 0.3% in March on declines in coal and oil – The Globe and Mail
“Statistics Canada says manufacturing sales edged down 0.3 per cent in March to $49.5-billion, the third decline in four months.
The agency says the decline largely reflects lower sales in the petroleum and coal product and in the chemical manufacturing industries. Excluding these industries, Canadian manufacturing sales rose 0.3 per cent.”