Sep 13 2010

Geithner Gets It?

Monday Business Edition

Monday Business Edition is an Open Thread

I don’t believe it.  I think this is pre-election posturing.  Still, as some have suggested, it’s possible this administration may be forced to make some policy promises that are not so easy to walk away from.

Geithner Urges Action on Economy

By DEBORAH SOLOMON, The Wall Street Journal

September 12, 2010

“If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth,” Mr. Geithner said during an interview with The Wall Street Journal in his U.S. Treasury office, citing the example of countries who “shift too quickly to premature restraint” after a crisis, including the U.S. in the 1930s.

On Sunday, a top Republican lawmaker signaled there might be room to compromise on extending the Bush tax cuts for high-income earners but, in a sign of how fraught the issue is, his words drew immediate skepticism from Obama administration officials. “I want to do something for all Americans who pay taxes,” House Minority Leader John Boehner of Ohio said on CBS’ “Face the Nation.” “If the only option I have is to vote for some of those tax reductions, I’ll vote for it. But I’ve been making the point now for months that we need to extend all the current rates for all Americans if we want to get our economy going again, and we want to get jobs in America.”

[The] typical error most countries make coming out of a financial crisis is they shift too quickly to premature restraint. You saw that in the United States in the 30s, you saw that in Japan in the 90s. It is very important for us to avoid that mistake. If the government does nothing going forward, then the impact of policy in Washington will shift from supporting economic growth to hurting economic growth.

Mr. Geithner, in the interview, rejected the view of many economists that allowing taxes to rise is unwise at this point in the recovery. The White House estimates the one-year cost of extension at $35 billion and the 10-year cost at $700 billion.

“We don’t have unlimited resources,” Mr. Geithner said. “We just don’t think it would be responsible for this country, given the size of our future deficits, and given the substantial burden the middle class has been bearing over the past decade in particular, to go out and borrow $700 billion from our children so we can sustain those Bush tax cuts that only go to the wealthiest 2% of Americans.”

He said the U.S. can no longer rely on consumer spending, which has long powered the economy, to be the growth engine that leads the recovery this time around and said Washington needed to plant the seeds for business investment and exports.

In the mean time here at The Stars Hollow Gazette we’re going to keep teaching Samuelson and not Snake Oil Salesmen.

From Yahoo News Business

1 Bank shares rally despite new tough rules on capital


1 hr 37 mins ago

BASEL, Switzerland (AFP) – Bank shares rose on Monday despite new “landmark” rules raising capital held by financial bodies to avert another crisis like the one which nearly broke the system two years ago.

The new rules, called Basel III, would force banks to more than triple their current reserves.

They would raise the capital base as a form of insurance against sudden strains in the system or on any particular financial institution, and would be phased in from 2013, a statement from the Bank for International Settlements, the so-called central bankers’ bank, said.

2 Deutsche Bank chief outlines Postbank takeover plan

by William Ickes, AFP

31 mins ago

FRANKFURT (AFP) – The head of Germany’s top bank, Deutsche Bank, unveiled on Monday the strategy behind its record capital increase a day after historic new bank regulations were agreed in Basel, Switzerland.

Josef Ackermann told a Frankfurt press conference the bank sought to become “the undisputable leader in Germany’s retail banking business and advance to the group of top banks in the European private clients business.”

Together, Deutsche Bank and Postbank will have a total of 24 million clients in Germany, he said.

3 Mobile phone users enlist YouMail "digital secretary"

by Glenn Chapman, AFP

Mon Sep 13, 3:24 am ET

SAN FRANCISCO (AFP) – Ranks of mobile phone users are enlisting the services of a “digital secretary” that automatically snubs unwanted callers, transcribes messages, and gives loved ones special handling.

California startup YouMail said Monday that it has passed the half-billion-call mark and now manages more than 1.5 million calls daily.

“The growth is strong and steady,” YouMail founder and chief executive Alex Quilici told AFP. “It is almost more convenient to not answer the phone with YouMail.”

4 Central bankers reach deal on new bank regulations


Sun Sep 12, 3:12 pm ET

ZURICH (AFP) – Banks will be required to lift their reserves substantially under “landmark” new rules drawn up Sunday by central bankers and regulators seeking to prevent a repeat of the recent financial crisis.

The new regulations, called Basel III, would force banks to more than triple their current reserves and would be phased in from 2013, said a statement issued by the Bank for International Settlements.

“The agreements reached today are a fundamental strengthening of the global capital standards,” said European Central Bank chief Jean-Claude Trichet, who chairs the group of regulators at the meeting in northern Switzerland.

5 Obama adviser sees high jobless rate continuing


Sun Sep 12, 6:42 pm ET

WASHINGTON (AFP) – President Barack Obama’s new top economist said Sunday he expects the US unemployment rate, which has edged up to 9.6 percent, to remain high for some time.

The US economy lost 54,000 jobs last month, but incoming chairman of the Council of Economic Advisors, Austan Goolsbee, declined to predict where the jobless rate might stand at the end of this year.

“I don’t think the unemployment rate will be coming down significantly in the near future,” he told “Fox News Sunday.”

6 German wages tread water as economy grows

by Aurelia End, AFP

Sat Sep 11, 11:53 pm ET

BERLIN (AFP) – German statistics show pay rises lagging behind the country’s growth rate, and the situation will likely last despite calls from trade unions and trade partners for higher salaries.

A study showed German wages rose by less than in any other European Union country in the past 10 years, boosting the biggest EU economy’s competitive position by two spots to fifth in rankings from the World Economic Forum.

In 2010, pay should increase by an average of 1.5 percent according to UniCredit economist Alexander Koch, while the economy is tipped to expand by at least double that.

7 Sweeping Taiwan, China trade pact takes effect

by Peter Harmsen, AFP

Sun Sep 12, 7:18 am ET

TAIPEI (AFP) – A historic trade pact between Taiwan and China came into effect Sunday, tying the two sides closer together than at any point since their split more than six decades ago.

The landmark Economic Cooperation Framework Agreement (ECFA), signed in June, is the most sweeping pact ever penned by the two sides, officially still not at peace after the end of a civil war in 1949.

“With ECFA becoming effective, the cross-Strait ties marched into a new era… Taiwan should better utilise the trend,” Taiwan’s President Ma Ying-jeou told reporters while on a trip to the southern Tainan county.

8 Doomsday warnings of US apocalypse gain ground

by Hugues Honore, AFP

Sat Sep 11, 11:20 pm ET

WASHINGTON (AFP) – Economists peddling dire warnings that the world’s number one economy is on the brink of collapse, amid high rates of unemployment and a spiraling public deficit, are flourishing here.

The guru of this doomsday line of thinking may be economist Nouriel Roubini, thrust into the forefront after predicting the chaos wrought by the subprime mortgage crisis and the collapse of the housing bubble.

“The US has run out of bullets,” Roubini told an economic forum in Italy earlier this month. “Any shock at this point can tip you back into recession.”

9 Greek PM vows to stay on course as 20,000 protest cuts

by Isabel Malsang, AFP

Sat Sep 11, 3:29 pm ET

THESSALONIKI, Greece (AFP) – Prime Minister George Papandreou vowed in a keynote speech Saturday to maintain his government’s austerity drive, as 20,000 protestors marched against the stinging economic measures.

“I lead this battle without thinking of the political cost,” the prime minister, a socialist, told visitors to the Thessaloniki International Fair. “It is a battle for the survival of Greece.

“Either we fight it all together, or we sink,” he added.

10 Greek PM rules out suspending debt payments


Sun Sep 12, 11:35 am ET

THESSALONIKI, Greece (AFP) – Greek Prime Minister George Papandreou has ruled out any restructuring of the country’s huge national debt, warning it would be “catastrophic for the economy”.

“The logic of restructuring the debt would be catastrophic for the economy, for our credibility, for our future,” Papandreou told a press conference on Sunday in Thessaloniki a day after sketching out his economic priorities during a visit to the city.

If debt payments were suspended, he said Greece “would head towards a potential and probable collapse of the banking system and the loss of Greek families’ property (which) would be a tragedy,” he added.

11 China posts fastest inflation rise in nearly two years

by Allison Jackson, AFP

Sat Sep 11, 2:29 am ET

BEIJING (AFP) – China said Saturday that consumer inflation rose at the fastest pace in nearly two years in August, as severe floods and unusually hot weather destroyed crops, driving up food prices.

The figure marked the 10th straight month that the consumer price index, a key measure of inflation, has risen, but analysts said they did not think it would be enough to prompt policymakers to raise interest rates any time soon.

Other key data released by the National Bureau of Statistics showed the world’s second-largest economy remained robust last month, suggesting the Asian giant was not slowing as fast as many had feared.

12 Investors, prepare for volatility

By Angela Moon, Reuters

Fri Sep 10, 6:33 pm ET

NEW YORK (Reuters) – Investors are using options to brace for big swings next week as Wall Street enters the peak of the most volatile month for stocks historically.

Options on the CBOE Volatility Index (.VIX), Wall Street’s so-called fear gauge, were one of the top-traded contracts in the options market as investors made bets on a sharp jump in the index.

Next week “is the real start of a month to be nervous about,” said Brian Overby, senior options analyst at online brokerage TradeKing in Charlotte, North Carolina.

13 Basel eases bank capital raising fears

By Gilbert Kreijger and Steve Slater, Reuters

1 hr 10 mins ago

AMSTERDAM/LONDON (Reuters) – New bank capital rules agreed by global regulators brought relief to the world’s banks on Monday although one of the architects said the sector would eventually have to raise hundreds of billions of euros.

The new requirements, known as Basel III, will demand banks hold top-quality capital totaling 7 percent of their risk-bearing assets, but a long lead-in time eased fears that lenders will have to rush to raise capital.

Europe is the most likely region for banks to need to raise funds, notable in Germany, Spain and other weak spots.

14 Small-business bill could be Democrats’ last hope on jobs

By Andy Sullivan, Reuters

Mon Sep 13, 2:00 am ET

WASHINGTON (Reuters) – Democrats in the U.S. Congress have a late chance to show frustrated voters they are trying to boost the sluggish economy with a plan to extend help to small businesses before the November midterm elections.

As lawmakers return from a month-long break this week, Democrats aim to pass their small-business bill out of the Senate by the end of the week and send it to the House of Representatives for final approval.

The House has backed a version of the bill previously.

15 Reinsurers look to 2011, get that sinking feeling

By Jonathan Gould and Jason Rhodes, Reuters

Sun Sep 12, 9:17 pm ET

MONACO (Reuters) – Reinsurers are trying to stay confident about pricing prospects for 2011 in the face of a chorus of industry observers predicting price and earnings pain.

At their annual Mediterranean meeting, the world’s biggest reinsurance players have once again vowed to maintain discipline in setting prices on the contracts for risk cover they provide to insurers, saying they won’t engage in a competitive race to the bottom.

The world’s biggest reinsurer, Munich Re (MUVGn.DE), predicted it would maintain stable prices overall on its portfolio of business to be renewed at the start of the year, and said some prices were even rising following the sinking of an oil rig in the Gulf of Mexico and earthquake in Chile this year.

16 Calif. neighbors survey ruins of blasted hillside

By TREVOR HUNNICUTT and GARANCE BURKE, Associated Press Writers

31 mins ago

SAN BRUNO, Calif. – Patrick Yu has had nightmares and headaches since a fireball from a natural gas explosion caused his ceiling to crash down next to him while he slept.

He was one of many residents who returned to the ruined hillsides of their suburban San Francisco neighborhood Sunday after Thursday’s pipeline blast and fire destroyed nearly 50 homes and damaged dozens of others.

The explosion prompted California regulators to order the utility, Pacific Gas and Electric, to survey all its natural gas lines in the state in hopes of heading off another disaster.

17 Petraeus issues guidance for Afghan contracting

By DEB RIECHMANN, Associated Press Writer

Sun Sep 12, 8:22 pm ET

KABUL, Afghanistan – The NATO command has issued new guidelines for awarding billions of dollars worth of international contracts in Afghanistan, saying that without proper oversight the money could end up in the hands of insurgents and criminals, deepen corruption and undermine efforts to win the loyalty of the Afghan people at a critical juncture in the war.

The guidance, issued last week by Gen. David Petraeus and obtained Sunday by The Associated Press, was issued in response to concern that the military’s own contracting procedures could be, in some cases, running counter to efforts on the battlefield.

The changes are aimed, in large part, at addressing complaints that ordinary Afghans have seen little change in their daily lives despite billions poured into their country since 2001.

18 Harley unions to vote on Wisconsin labor contract

By DINESH RAMDE, Associated Press Writer

Mon Sep 13, 3:03 am ET

MILWAUKEE – The chief executive of Harley-Davidson Inc. has urged Wisconsin employees to approve an unpopular labor contract Monday, telling them the motorcycle company is prepared to move on without them if they turn it down.

CEO Keith Wandell wrote a letter last week telling the workers it’s up to them to decide whether they want to remain part of Harley’s future.

“We are on a course to build a competitive company for the future and a business that is sustainable long term,” the letter said. “Nothing can get in the way of this objective.”

19 EPA to hold NY hearing, last of 4, on gas drilling

By MARY ESCH, Associated Press Writer

Sun Sep 12, 6:02 pm ET

ALBANY, N.Y. – The oil and gas industry is urging the Environmental Protection Agency to keep a narrow focus in its study of how a drilling technique that involves blasting chemical-laced water into the ground may affect drinking water – while environmental groups want the study to cover everything from road-building to waste disposal.

The issues will be aired Monday in two-minute speaking slots at an EPA hearing twice postponed last month because of security concerns over rallies and crowds anticipated in the thousands.

The hearing, the last of four around the country, will be held in two sessions on Monday and two more on Wednesday at The Forum in Binghamton, 115 miles southwest of Albany. The EPA is taking comment on how broadly to construct its study of hydraulic fracturing, or fracking, a technique for releasing natural gas from rock formations thousands of feet underground by injecting at high pressure millions of gallons of water mixed with chemicals and sand.

20 Why some gloomy investors are bullish on stocks

By BERNARD CONDON, AP Business Writer

Sun Sep 12, 2:52 pm ET

NEW YORK – Can you make good returns in a lousy market?

If you believe a few respected money managers, there’s opportunity aplenty in stocks now. If you find that surprising, wait until you hear where they think the bargains lurk: big blue chips that almost always fetch premium prices.

Legendary bear Jeremy Grantham of GMO LLC in Boston says the U.S. faces “seven lean years” of meager growth, but he has been pounding the table about blue chip bargains with big dividends. Steven Romick of FPA Crescent predicts rising taxes and an economic malaise but is singing the praises about “bigger is better” stocks now, too.

21 Greek prime minister: no new austerity measures

By NICHOLAS PAPHITIS, Associated Press Writer

Sun Sep 12, 3:05 pm ET

THESSALONIKI, Greece – The Greek government is planning no new austerity measures as part of efforts to pull the country out of debt and might even exit international supervision earlier than expected, the prime minister said Sunday.

George Papandreou said Greece was on track to meet targets for reducing its deficit by nearly 40 percent this year.

“We will not need any new measures,” he said during a news conference a day after making his annual speech on the economy on the sidelines of a trade fair in northern Greece. Papandreou also reiterated that Athens did not plan to restructure its debt – a move that he said would have been “catastrophic.”

22 Rendell marshals aid for troubled Pa. capital city

By MARC LEVY, Associated Press Writer

Sun Sep 12, 2:32 pm ET

HARRISBURG, Pa. – The Rendell administration is speeding more than $4 million to help Pennsylvania’s capital city avoid a rare default on a general obligation bond and help it right its troubled finances, even as massive debt threatens to drag it into bankruptcy.

Gov. Ed Rendell insisted Sunday that the aid is not a state bailout, and said he only got involved in assembling the aid package after Harrisburg Mayor Linda Thompson called him Thursday morning.

All of the state money, except for a $100,000 grant under his control and a $500,000 loan, was due to the city anyway in future months, and should give it “breathing space” to sort out a solution, he said.

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