07/09/2012 archive

Austerity is not going well for Europe or the US.

U.S. Stocks Post Longest Slump in 1 Month on Europe Woes

by Rita Nazareth and Julia Leite

U.S. stocks fell, giving benchmark indexes the longest slump in more than a month, after a jump in Spanish bond yields above 7 percent intensified concern about Europe’s crisis and as investors awaited Alcoa (AA) Inc.’s results.

The Standard & Poor’s 500 Index slid 0.2 percent to 1,352.45 at 4 p.m. New York time, according to preliminary closing data, paring an earlier loss of as much as 0.6 percent. The benchmark index dropped 1.6 percent over three days.  [..]

Stocks joined a global slump as the yield on Spain’s 10- year bond rose above the threshold that prompted bailouts in Greece, Ireland and Portugal. German Finance Minister Wolfgang Schaeuble dismissed a rapid move toward direct bank recapitalization by the European rescue fund, limiting the tools for shoring up Spanish banks as the euro-area crisis simmers.

Stocks Retreat as Spanish 10-Year Bond Yield Exceeds 7%

By Stephen Kirkland and Rita Nazareth

U.S. stocks fell for a third day as Spain’s 10-year debt yield topped 7 percent, fueling concern the debt crisis is worsening, and investors awaited the start of the earnings season. Corn and soybeans surged on forecasts for more dry U.S. weather. Treasuries rose.

The Standard & Poor’s 500 Index slipped 0.2 percent at 4 p.m. in New York and the Stoxx Europe 600 Index fell 0.4 percent. Ten-year Spanish yields jumped 11 basis points to 7.06 percent after rising as high as 7.108 percent. The euro climbed 0.2 percent to $1.2319, rebounding from a two-year low of $1.2251. Corn rose as much as 5.8 percent and soybeans jumped to a four-year high. Oil added 1.8 percent to $85.99 a barrel and natural gas rallied as a strike threatened supplies from Norway.

E.U. Seeks to Dispel Doubts About Bank Bailouts

by Paul Geitner and Stephen Casstle

BRUSSELS – With borrowing costs for Spain and Italy climbing again to critical levels, European officials sought Monday to dispel doubts about a deal struck last month to break the “vicious circle” between shaky banks and weak governments.

Spain, suffering through its second recession in three years, was also expected to win more time to rein in its budget deficit even as euro zone finance ministers haggled in Brussels over terms of a bailout for its troubled banks.

Amid the unrelenting market pressure, the European Central Bank reaffirmed that it stood ready to do more to stem the crisis – within the limits of its mandate – while urging euro zone governments to press ahead with closer integration.

Even here in the US, the Federal Reserve admits that they may be reaching there limits on their ability to fix unemployment and are at odds as to what to do next.

Fed’s Lacker Says U.S. May Be Close to Maximum Employment

By Kathleen Hays and Jeff Kearns

Federal Reserve Bank of Richmond President Jeffrey Lacker said the U.S. may already be close to maximum employment from a monetary policy standpoint and that policy makers can’t do much more to cut the jobless rate.

“Given what’s happened to this economy, I think we’re pretty close to maximum employment right now,” Lacker said today in a Bloomberg radio interview on “The Hays Advantage” with Kathleen Hays and Vonnie Quinn. “That might be shocking. That might be surprising.”

Fed policy makers believe the U.S. central bank has limited control over the jobless rate because the employment level is driven by “non-monetary factors that affect the structure and dynamics of the labor market,” according to the January statement from the Federal Open Market Committee. The jobless rate was unchanged at 8.2 percent in June.

Lacker, who has dissented from all four FOMC decisions this year, is at odds with colleagues on what the Fed should do to boost the economy. He said in a June 22 statement that he opposed the FOMC’s $267 billion extension of its Operation Twist program because it may spur inflation and won’t give the economy a significant boost.

San Francisco Fed President John Williams said today the U.S. central bank must maintain “extraordinary vigilance” to see if the slowing economy requires additional monetary stimulus. “If further action is called for, the most effective tool would be additional purchases of longer-maturity securities, including agency mortgage-backed securities,” Williams said in a speech in Coeur D’Alene, Idaho.

While all the PTB debate how to save banks and the markets, the 99% are getting poorer putting an even bigger drag on the economy. For most the recession never ended.

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

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Paul Krugman: Mitt’s Gray Areas

Once upon a time a rich man named Romney ran for president. He could claim, with considerable justice, that his wealth was well-earned, that he had in fact done a lot to create good jobs for American workers. Nonetheless, the public understandably wanted to know both how he had grown so rich and what he had done with his wealth; he obliged by releasing extensive information about his financial history.

But that was 44 years ago. And the contrast between George Romney and his son Mitt – a contrast both in their business careers and in their willingness to come clean about their financial affairs – dramatically illustrates how America has changed.

Simon Johnson: Banks’ Living Wills Don’t Defuse Systemic Risk

On July 3, the Federal Deposit Insurance Corp. and the Federal Reserve made public portions of the “living wills” developed recently by major U.S. financial institutions. The documents are the first suggestions from those organizations of what they believe should happen when insolvency looms.

The living wills were prepared in compliance with the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act and are a major step forward in terms of revealing how global megabanks are structured. Yet they are shockingly incomplete and flawed in one crucial aspect: They neglect to explain how cross- border assets and liabilities would be handled in different legal jurisdictions.

The plans should be rejected by officials and sent back to the banks to be revised. As these proposals now stand, they are a blueprint for further financial disaster, and additional taxpayer-backed bailouts.

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

July 9 is the 190th day of the year (191st in leap years) in the Gregorian calendar. There are 175 days remaining until the end of the year.

On this day in 1995, the Grateful Dead gave their last concert at Soldier Field in Chicago, IL.

For mishima

Arc-et-Senans / Besançon (26 miles)

Le.  Tour.  De.  France.

Thibaut Pinot, the youngest competitor this year, put the French back in Le Tour yesterday chasing down Fredrik Kessiakoff who led a solo breakaway for much of the latter part of the stage and holding off a pack of GC contenters at the finish for the victory.

Samuel Sanchez had to withdraw with a broken hand after an early crash, joined on the day by Johannes Frohlinger and Gorka Verdugo.

Another one of those Individual Time Trials that I hate.  I really dig the Team Trials because of the teamwork, the Individual ones are boring which is why they don’t have Rally Racing on TV even though it is in fact bloodier than Turn Left.  Likewise you can see this very year how 10 seconds picked up after 4 miles has stood up for 8 days.

Really Evans needs to put on a show and it may net just a second or 2, but this and getting away on a climb (or avoiding an accident) are the only ways to make time directly against your opponent, everything else being absorbed into Same Time black hole.

Tomorrow, Tuesday, is a rest day, but they will have a recap show.  I’ll be attempting to detangle the stage winner predictions and clear up my dvr as well as put together the Master GC List for the first third of the tour.  Expect a diary before the Rest Day Recap at 8 pm and midnight tomorrow.

General Classification

Coverage is customarily on Vs. (NBC Sports) starting at 8 am with repeats at noon, 2:30 pm, 8 pm, midnight, 8 and 11:30 am and 3 pm tomorrow.  There will be some streaming evidently, but not all of it is free.

Sites of Interest-

• 2012 Le Tour
• Arc-et-Senans / Besançon (26 miles)
• Wikipedia
• Geek Guide (very basic)
• Guardian Interactive Guide

The Stars Hollow Gazette Tags-

• Le Tour
• 2010 Le Tour
• 2011 Le Tour
• 2012 Le Tour

Pretty tables-

If you follow this series closely, you will remember that the last element that we covered was lithium, and so the next one should be beryllium.  However, I wrote about beryllium recently and so you can just follow the link.

Last week I wrote about fireworks safety, and my piece was prescient and unfortunately evidently not read by some unfortunate youths in Arkansas.  My friend, who often comments here using the handle justasabeverage, sent me the newspaper article by email the other day that covers the topic after the fold.

“The industrial reserve army, during the periods of stagnation and average prosperity, weighs down the active army of workers during the periods of over-production and feverish activity, it puts a curb on their pretensions. The relative surplus population is therefore the background against which the law of the demand and supply of labour does its work. It confines the field of action of this law to the limits absolutely convenient to capital’s drive to exploit and dominate the workers (Marx, 1867, Capital, volume I, Penguin edition, p. 792).”

Introduction

This post is part I of a series discussing the labour market under capitalism. In this part, I am addressing the issue of persistent unemployment in capitalism and the introduction of workfare in the UK specifically. I am addressing both economic and political inconsistencies of the introduction of workfare under Capitalism and Bourgeois Democracy. I conclude this post by addressing the crisis of bourgeois democracy that is exemplified by the contradictions between the introduction of forced labour and human rights, one of the strongest weapons belonging to the ideology of bourgeois democracy.

Workfare, a welfare to work scheme, which forces welfare recipients to work to earn their benefit, has existed for some time in the US (see: 1996 Personal Responsibility and Work Opportunity Act: http://en.wikipedia.org/wiki/P… and for a comparison between state workfare programmes in the US see: http://www.ssc.wisc.edu/~gwall… Originally introduced in the UK by Labour in 1998 and insultingly called the “The New Deal” ( http://en.wikipedia.org/wiki/N… ), it enabled penalties for those that refused “reasonable work” and established courses and volunteer work to get those on benefits into work and provided tax credits for working families to keep them working.

However, the attempt by the current government in the UK to extend it has led to both legal action and resistance on the part of those being forced to labour. The 2010 “Work for your Benefits Pilot Scheme” ( http://www.legislation.gov.uk/… ) and the extension of the “Mandatory Work Activity scheme” (2011: http://www.legislation.gov.uk/…  http://www.parliament.uk/docum… which is supposedly for those that are not on board with the shift from welfare to work strategy of the government) in numbers of “customers” forced to labour without pay and  in light of severe criticism in terms of the introduction of forced labour as well as the known ineffectiveness of these schemes is more than questionable. However, it is certainly consistent with the policies and beliefs of the current government.

The second part of this series will concentrate on workfare in the UK and the actions that are part of the fight-back against the extension of workfare and this will go up tomorrow at 12 noon eastern.

One of the most important contradictions in the capitalist economic system lies in the nature of the labour market itself. On the one hand, capitalism requires free labour; that is, free in the sense that it is no longer tied by law to specific aristocrats that provided subsistence in exchange for labour on their land as serfs or tied to specific masters as slaves. In fact, the existence of slavery and indentured servitude in the US arose initially due to the insufficient number of labourers; it continued due to racism and the usefulness of divide and rule amongst working people. While not denying the importance of morality and human decency, when it started to be an impediment with the development of the domestic market, capital moved to eliminate it. Free labour means that instead labour is free to sell its labour to obtain subsistence. On the other hand, the dependence upon wages earned through labour means that they are subject to the vagaries of the labour market itself and the needs of profitability and capital accumulation within the system itself.  However, from its earliest, capitalism and unemployment go hand in hand. The numbers of workers needed by the system depends essentially on profitability criterion; full employment is a fantasy, even in periods of rapid economic growth.

Burning the Midnight Oil for Living Energy Independence

Crossposted from its home station at Voices on the Square

Passed!

Firedog Lake: California Legislature Passes High Speed Rail Bond Issue, Moving Project Forward ~ David Dayen

…

In a closely watched vote of the California state Senate, a bill to issue the first $5.8 billion in bonds for the construction of high speed rail lines passed 21-16. It needed all 21 votes to pass. Four Democrats voted no – including Allen Lowenthal, the Democratic candidate for Congress in CA-47, and Fran Pavley, the author of the state’s historic global warming law – but ultimately, just enough Democrats voted in favor of the bonds for them to pass. Joe Simitian and Mark DeSaulnier were the other Democrats who opposed the bill.

…

This does not end the battle for high speed rail. Between the bond issue and the federal money, that covers only about 1/5 of the total funding needed for the full project, which would connect Sacramento and San Diego and all points in between by high speed rail. But if this died today, you can be certain that nothing would ever get built. The federal government was prepared to take away the $3.2 billion in stimulus dollars earmarked for this stage of the project. And faith in the future of high speed rail in California – and indeed the nation – would have been sapped.

So … what now?