On July 13, the International Monetary Fund issued a report in which they said Greece needed to cut even more public spending, and that it needs a third bailout. European officials are still hammering out the details of the second bailout.
The IMF says Greece needs a third bailout, consisting of at least 71 billion Euros from the European Union, and 33 billion Euros from private creditors.
Enough! Just let the dominoes start falling!
“They [banks] didn’t vote for the bond issue, they didn’t support the bond issue. They’re simply trying to underwrite some of them.”-Paul Sheldon Foote, California State University Fullerton
Professor Foote is explaining that, what he calls “…stupid idea…” bonds/levies, are forms of debt voted on by taxpayers, but funded by investment bankers.
You don’t want local government and school district employees to lose their jobs. You don’t want to see kids lose out on education programs that might be cut. But voting for a levy, or bond issue, means you’re supporting those jobs and education programs purely on debt.
“Local governments draft levy bonds to sell at current market rates to raise capital for work projects.”-eHow money
In fact, it becomes a downward spiral, many bond levies are actually being used to pay off previous bond issues. It has to stop, before there’s no one left who’s willing to invest in the next bond/levy issue.
In fact the debt crisis in California is due in part to investors not wanting to back up any more bond issues: “The state treasurer can not possibly issue every single one of them [bond issues] because, fortunately, the ratings agencies and investors see through it and would not possibly finance every single stupid idea that comes out of politicians!”–-Paul Sheldon Foote, California State University Fullerton
So what’s the answer? An economics professor in the United Kingdom likes what North Dakota has done with its own State Bank: “The answer is, is to use the state bank mechanism for all your capital projects… And [North] Dakota is in fact, in practice, in a way a public bank giving a lead in that respect.”-Rodney Shakespeare
Shakespeare says the public bank in North Dakota charges interest on loans, but the revenue from that interest stays in North Dakota, and does not go out of state to corporate controlled banks.
“The slowdown in import growth will last two to three months or even longer due to both falling demand and possible commodity price drops.”-Li Wei, Standard Chartered Shanghai
While China’s industry activity looks great, compared to other countries, the fact is that it’s slowing down. The latest import numbers are the lowest ‘increase’ since November 2009. This means that Chinese industries are buying less materials from other countries.
Imports are at 19.3%, compared to the previous year. But export numbers are down as well.
China’s June export numbers are 17.9%, compared to May’s 19.4%. Export numbers to the U.S. and EU dropped to 16.9%.
“The slow recovery of the global economy and the European debt crisis have added uncertainties to export growth.”-Zheng Yuesheng, GAC statistics
While some Chinese industry analysts remain optimistic, some Chinese officials are not so positive: “Exporters in Zhejiang have experienced a disappointing first half, and the second half will not be better.”-Han Jie, Zhejiang Department of Commerce
“We can’t go on for many more days like Friday. We’re very worried about Italy.”-European Central Bank official
July 11, European Union officials are in emergency mode, after it became clear that the second bailout loan for Greece will arrive too late to stop default, and now Italy is on the verge of financial collapse.
EU officials are scrambling to figure out how to get the bailout money to the Greek government faster, because it is now clear Greece is in much worse shape than thought, and will officially default soon.
“We need to move on this in the next couple of weeks. It’s not a case of waiting until late August or early September as Germany is saying. That’s too late and markets will make us pay for it.”-European Union official
EU officials are also scrambling to plan a possible bailout of Italy’s collapsing economy. On Friday, July 8, there was an unexpected sell off of Italian government assets. Italy is considered the EU’s third largest economy.
Both EU officials, and Italian officials say the bond markets are actually making things worse. That’s because a lot of the money for the Greek bailout, and now a possible Italian bailout, is coming from private sources (like investors). Now many of those private bailout sources are having second thoughts because it’s very possible they won’t get their money back.
It’s not helping that Germany is pushing for a rethink of the second Greek bailout. They say the problem in Greece could take 15 years to fix: “It [second Greek bailout] can’t be something that will suffice for a three-month period but rather has to offer solutions to the problem that will cover the next 10 to 15 years.”-Christian Wulff, President of Germany
Germany has a lot of power in the EU, because they seem to be the only member country who’s economy is booming, thanks to their deals with China.
Recently the Chinese government changed income tax laws, to help low income workers keep more of their money. The new law increased the number of workers who don’t have to file income tax.
The Chinese real estate industry is now warning that could reduce property sales.
In China you must have official papers declaring you a permanent resident of the area you want to buy property in. If you don’t have such paperwork, you can use your income tax filing to show that you work in that area. The problem with the new tax law is that it will reduce the number of migrant workers who would’ve had those tax records to use to buy a home with.
A Beijing realtor says the new tax law will reduce the number of qualified migrants, in his area, by more than 90%.
This comes after the Chinese government ordered banks to tighten mortgage lending by either increasing down payments, or increasing mortgage interest rates.
In June, the average amount of time a person is unemployed reached a record 39.9 weeks.
“We have had many, many months to stimulate this economy and still not seeing businesses hire, it’s a real concern.”-Frank Davis, LEK Securities
“I send out 50 to 60 resumes a week. Nobody ever gets back to you.”-Rob Attanasio, unemployed more than one year
“I feel washed out from the statistics, in terms of not being heard, in terms of the energy that it has taken for me to keep trying to find work. I don’t feel like I’m even on the radar screen in Washington.”-N. David Cooper, unemployed more than one year
“I’ve had nightmares about my family living on the street.”-Said Nasser, unemployed more than one year
“What we’re seeing here is a sort of settling into the reality of where things are, maybe not holding out as much hope as they once held out that there’s going to be a big recovery, and all of it is going to come back. Instead, people are looking around and saying, ‘Maybe this is going to be what it’s going to be.'”-Rusty Rueff, Glassdoor.com
“Your hope soars when you snag a job interview; then it’s dashed when there’s no job offer. Repeat this over and over again and you start to feel like it’s better not to get your hopes up.”-Fran Hopkins, unemployed more than one year
“It’s very hard when you’re over 60. Nobody wants us. We’ve just been leaving resumes, that’s it. You get no reply.”-Mary Kadin, unemployed since April 2011
“Today, companies are producing more goods and services than ever before. The economy is able to do that with 7 million fewer workers. If we can do so much with so much less, where is the incentive to hire?”-Bernard Baumohl, The Economic Outlook Group
For the past few days the stock markets have been going up (mainly those reported by the Dow Jones). Some mainstream U.S. media outlets were saying it’s because of good jobs data. It turns out their claims of good jobs data was based solely on “expert” economists, who were just plain guessing (like always).
Today, July 8, the U.S. Department of Labor released the official job hiring numbers for June, and boy are the “expert” economists way off. The mainstream media had been reporting that “expert” economists predicted 120,000 people would be hired in June. The actual number of people hired…18,000. That’s a big difference. It’s also clear proof that the U.S. economy is not recovering.
The job creation number is a “net” number, meaning it’s what’s left over after you subtract the number of people who lost jobs. Another way to say it is that corporate america fired way more people than they hired. And this has been going on for years now.
“We are backsliding. The chances are that we go into another recession or we muddle along at technical growth, but actually making no improvements as far as Main Street goes. The chance of one of those things happening is extremely high.”-Heidi Shierholz, Economic Policy Institute
How bad is the unemployment situation? Officially 7 million people lost their jobs as a direct result of the credit crisis, which started in 2007/2008. Today, officially there is still 6.3 million people with no jobs! And by “officially” I mean those people who’re still counted by state and federal unemployment agencies, there are potentially millions who’re no longer counted.
If you notice I used two quotes from economist who seem to know what’s really going on. I see many reports and comments from such economists, yet the mainstream U.S. media always goes with the “experts” who always get it wrong.
Why would the mainstream U.S. media continue to report faulty data? Could it be because the mainstream U.S. media is not only traded on the stock markets, but is actually invested in the stock markets, so basically they’re scamming potential investors to give up their money to the biggest casino in the world, The Stock Market?
There are also those who believe the mainstream U.S. media is doing the bidding of the Federal government, in trying to make things look better than they really are, to try and prevent mass civil disobedience (like what’s happening in some European countries).
In any event, it is clear that you can’t rely on the mainstream U.S. media for “facts” about our economy. And you can not use the stock market as a gauge for the performance of our economy.
The fact that 6.3 million people are still officially out of work, shows that after three years of promises about improving our economy, and claims that the recession is over, absolutely nothing has improved and many “Main Streeters” think we’re heading into a Depression.
U.S. media reported that the continued increase in the New York Stock Exchange (reported by the Dow Jones) is because of good economic data, like better than expected job numbers.
Monthly unemployment numbers are still over 400,000, and many economists have repeatedly stated that it needs to drop below 400,000, for several months in a row, to be considered a “good” sign.
Could the real reason be that the NYSE (aka NYSE Euronext) was just approved, by shareholders, to take over one of Germany’s stock markets: Deutsche Boerse AG.
The take over still needs approval of Deutsche Boerse shareholders.
This seems to be a more likely reason for the upswing in the NYSE trades, because Germany is the only economic powerhouse left in the European Union, thanks to its many trade deals with China.
According to the NYSE website, “…NYSE Euronext’s equities markets include the New York Stock Exchange, NYSE Euronext, NYSE Amex, NYSE Alternext and NYSE Arca. NYSE Euronext also operates NYSE Liffe, a European derivatives business.”
The Dow Jones is a stock market index, which includes the NYSE Euronext trades in its daily reporting.
In an effort to fight inflation the Chinese government recently ordered banks to tighten their grip on the money supply. One way is to cut back on loans.
The China Construction Bank announced they will increase down payments on homes, for first time buyers, to 40% of the purchase price. The Chinese banks were told to either raise the amount of down payments, or increase interest rates on mortgages. This could pop China’s housing market bubble.
General Motors, desperate to increase domestic sales, will include insurance on new car purchases. But only if you live in Oregon or Washington states.
It is part of an experimental marketing program, to increase car sales. The insurance will be provided by Met Life.
The experiment will last until September 6. Oregon and Washington are being targeted because GM sales suck in those two states.