EU posts
Posted Jun 12th 2009 12:00PM by Connie Madon
Filed under: International markets, Federal Reserve, Financial Crisis
The numbers cited here for bank rescue costs are staggering -- way beyond our imagination. Keep in mind that we are talking trillions, not billions. You might want to etch these numbers in your memory to say that you have lived through perhaps the greatest financial crisis of our time.
- The U.S. government and the Federal Reserve have spent, lent, or committed $12.8 trillion to bank rescue, which amounts to about the value of everything produced in this country as of March 31.
- EU governments have approved $5.3 trillion of aid, more than the annual GDP of Germany.
- The UK pledged $1.1 trillion to restore confidence in its lenders, the most of any EU member.
- The top three EU states providing capital injections were the UK with $781.2 billion, Denmark with $593.9 billion and Germany with $554.2 billion.
Continue reading Bank rescue costs are staggering, and there's more to come
Posted Mar 2nd 2009 8:00AM by Joseph Lazzaro
Filed under: International markets, Eastern Europe, Recession, Financial Crisis
Following the instructions of President John F. Kennedy, "I appreciate candor almost as much as I appreciate good news," we're moving forward with candor, however unpleasant.
Investors take heed: the U.S. recession most likely just got longer.
The European Union, led by Germany, has rejected Eastern Europe's pleas for an aid package of about $228 billion, citing budget concerns in their own Western European countries, Bloomberg News
reported Sunday.
The E.U.'s failure to provide aid and fiscal stimulus to Hungary, the Czech republic, Slovakia, Romania, Bulgaria, Latvia and Poland will hurt both the U.S. and global economies.
Continue reading Eastern Europe aid plea rejection likely to delay Europe, U.S. recoveries
Posted Jan 19th 2009 3:45PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Bad news, Economic data, Recession
In 2009 Europe, font of western civilization, will experience its first recession since the launch of the
euro currency, the European Commission
announced Monday. Reversing an earlier forecast, the commission, governing council of the European Union, now forecasts that the economy of the 16 nations that comprise the euro zone will contract 1.9% in 2009, a downward revision from the September 2008 estimate of a scant 0.1% growth. (There are 27 nations in the larger European Union, with 11 who are not members of the euro zone's monetary union.)
Further, the EU sees GDP increasing just 0.5% in 2010 in the euro zone. As a result of the recession, and the slow, gradual recovery, euro zone unemployment is expected to increase to 9.25% in 2009, "with a further increase in 2010," but the EU did not specify an unemployment rate estimate for 2010.
Economist Peter Dawson told BloggingStocks Monday although the euro zone did not experience anywhere near as large a housing bubble as the United States, the bursting of the bubble and consequent financial crisis have created negative ripples in the euro zone economy almost as bad as those in the states.
Continue reading EU reverses 2009 forecast, now sees first recession in euro's history
Posted Jan 14th 2009 1:16PM by Joseph Lazzaro
Filed under: Forecasts, China, Economic data
Amid the global recession there has been one sign of economic growth, albeit retroactive growth.
China has revised its estimate for 2007 GDP growth to 13% from the previously-released 11.9%,
the Associated Press reports. With the revision China's 2007 GDP totaled $3.5 trillion, passing Germany's $3.3 trillion for third place, globally. (The United States is first, followed by Japan. And I should note that Germany is part of the European Union, and if the E.U. were ranked collectively, it would be the largest economy in the world, followed by the United States, Japan, then China.)
Economist David H. Wang, a China expert, said it's not unusual to see a large change in an emerging market nation's GDP estimate given the frenetic nature of a developing economy's expansion.
"Developing markets are characterized by overbuilding, excesses, inflation, and isolated shortages, and this has been the case in China. We know that growth had been strong up until the financial crisis. My reading now is that China's GDP is currently growing at a 7-8.5% annualized rate," Wang said. "Like the rest of the world, there's been a pronounced slowdown in China, but that doesn't blot out the impressive growth registered from 2003 to 2007."
Continue reading China ups 2007 growth estimate, now world's third largest economy
Posted Jan 7th 2009 1:15PM by Joseph Lazzaro
Filed under: International markets, Bad news, Russia, Politics, Commodities, Eastern Europe
On Tuesday Russia cut off all natural gas to Ukraine, creating shortages in Europe that could spread across the continent as a cold snap grips the region,
Bloomberg News reported. Gas shortages were reported in Ukraine, the Balkans, Bulgaria, Poland, Italy, and Hungary.
The shortages were expected to extend to Germany, Austria and broader Europe, as a cold snap with temperatures below 20 F degrees is expected to increase demand for fuel in Eastern and Central Europe,
The New York Times reported Tuesday. When the natural gas is flowing, Europe imports about 20% of its natural gas from Russia.
The current Russia natural gas cut-off has already lasted longer than the last Russian cut-off, in January 2006.
It's about price . . . and politicsThe dispute pertains largely to price, but also involves geopolitics. Russia's oil and natural gas giant Gazprom is seeking to raise the price of natural gas to $450 per 1,000 cubic meters from $179.50 last year, and to collect fines for alleged late payments.
The Times reported. However, analysts also believe Russia is upset with Ukraine's move to apply for North Atlantic Treaty Organization membership and the nation's closer ties with the United States and Europe. Ukraine is seeking to integrate more fully with the West, but Russia views Ukraine as part of its sphere of influence.
Continue reading Russia cuts off all natural gas to Ukraine; Europe shortages may spread
Posted Dec 22nd 2008 2:19PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Politics, Recession, Financial Crisis
So globalization -- the spread of free markets integrated internationally by trade -- is guaranteed, correct? Just like the market's ability to self-correct, self-reform, and self-regulate?
Not quite, says
New York Times columnist and Nobel Prize-winning economist
Paul Krugman.
Krugman argues that the current globalization era is actually 'Globalization 2.0.' 'Globalization 1.0' began in 1919, also a period of large-scale international trade and investment, when it was thought that commerce and the benefits of trade would render previous ethnic and cultural rivalries between nations irrelevant.
History did not begin in 1981What followed, Krugman notes -- and this will be illuminating for those investors who believe
history began in 1981 -- was war, revolution, political instability, depression, and more war ... for 30 years.
To be sure, the world today is a different 'political economy place' than it was in 1919, Krugman adds, with the economic / minor-political integration of Europe being a big difference: the euro-zone and E.U. means European states are less likely today to go to war with one another.
Continue reading NYT's Krugman: Hopefully, 'Globalization 2.0' will fare better than 1.0
Posted Nov 14th 2008 11:00AM by Joseph Lazzaro
Filed under: International markets, Forecasts, Bad news, Recession
So much for the 'decoupling' thesis -- the belief that emerging market economies could maintain adequate global growth in the face of a developed-world recession.
All of the world's major economies -- the United States, the European Union, and Japan -- have most likely slid into a recession -- the Organization for Economic Cooperation and Development (OECD)
announced in its most recent projection. A tri-polar contractionThe OECD sees GDP in the three major zones contracting 1.4% in Q4 and 0.4% for all of 2009 -- a decline in output that will create a global recession for at least the first half of 2009.
Economist Richard Felson told BloggingStocks Friday it's difficult if not impossible to put a positive spin on the OECD's latest projection -- a projection he believes will prove to be accurate.
"Other than the bursting of the commodity price bubble and a pull-back in inflation, it's hard to see any positives," Felson says. "The world needs expansion in at least one and ideally two of the major economies to maintain adequate global growth, so you can see the fix we're in, from a demand standpoint. That's all the more reason for governments in both the developed and developing worlds to increase fiscal stimulus."
Continue reading OECD forecasts global recession for 2009
Posted Nov 11th 2008 5:15PM by Joseph Lazzaro
Filed under: Forecasts, Recession, Financial Crisis
Time provides the advantage of not only additional events, but also the ability to the compare these events to conditions and issues in previous eras -- an argument against 'instant-analysis' and a major reason my Ph.D. advisor said, "
Don't study any public official's decisions until he or she has been dead for 20 years."Hence, time is naturally providing more evidence and perspective on the recently-ended period of global economic growth, and increasingly the evidence is showing that it was a global economy of unsustainable imbalances -- balances that policy makers mistakenly ignored.
2001-2007: a policy voidFirst and probably foremost there was the
oil price imbalance. Whether they were driven up by speculators, by institutional investors seeking a return on equity, global energy demand, and/or by other factors, economists had warned for years that the U.S. and global economies could not continue to grow at adequate rates with oil above $80 per barrel. In fact, every previous oil shock in the modern era was followed by a recession in the United States. Still, little was done from a policy standpoint to stem oil's price rise.
Similarly, the U.S.'s then-increasing trade deficit, a good part of which had been fed by purchases of imported oil, and the notion that U.S. consumers could serve perpetually as the growth engine of the export-oriented developing world, was unsustainable, given stagnant U.S. incomes, and its nadir savings rate. Yet little was done to address this imbalance.
Continue reading It was a global economy of imbalances
Posted Oct 22nd 2008 1:23PM by Joseph Lazzaro
Filed under: International markets, Recession
Now one would think that the dollar, viewed as the source of much of the world's commodity price inflation this decade, rising from long-term lows would be a cause for celebration.
Not exactly.
While the dollar's rally against most of the world's other major currencies does mean commodity price pressures are likely to continue to subside -- and that's good news for inflation, economists say -- the dollar is nevertheless rising for the wrong reason. Namely, an economic slowdown in Europe.
Euro, pound plunge on recession concerns"It's not so much as the dollar is strengthening but that the euro and pound are weakening on the likelihood that central banks in Europe will have to cut interest rates more to deal with a recession," economist Peter Dawson said. "Europe is also seen as later in the business cycle than the U.S., which means the U.S. economy is likely to recover sooner, which also helps the dollar. "
Continue reading Dollar rises vs. euro and pound, but no cause for celebration
Posted Oct 18th 2008 6:40PM by Joseph Lazzaro
Filed under: International markets, Forecasts, Financial Crisis
Nouriel Roubini, the once obscure New York University economics professor who two years ago predicted the current global financial crisis, now says the world's largest economy will need a large fiscal stimulus from the federal government to avoid a serious economic downturn.
Further, failure by Congress to pass a large fiscal stimulus, as well as undertake other measures, will lead to a 18 to 24 month recession, which will push unemployment above 9%, Roubini said on his website, the RGE Monitor.
Sees need for large fiscal stimulus
"Much more needs to be done including further monetary policy easing, a large fiscal stimulus program to boost demand at the time when private aggregate demand (consumption and investment) are sharply falling; and a plan to reduce the mortgage debt burden of millions of distressed households," Roubini said.
Further, Roubini said the U.S. government will have to double its purchase of bank stakes and require these banks to eliminate dividends to save them from bankruptcy. He also now sees bank/financial institution credit losses stemming from the collapse of the subprime mortgage market of about $3 trillion, up from his earlier estimate of $1-2 trillion.
The above statistics paint a sobering prospect/picture of economic contraction, but Roubini does see a ray of light:
Continue reading NYU's 'Dr. Doom,' Nouriel Roubini, says U.S. recession could last 18-24 months
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Rambus Inc. (NASDAQ: RMBS - option chain) shares are rising today after the company said European Union antitrust regulators have agreed to drop a probe and any fines if the company reduces its royalty rates for DRAM memory chip patents. The European Commission had charged RMBS with setting exorbitant royalties for DRAM patents. If you think that the stock won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on RMBS.
How do we know that world trade is loosening up? One indication is the U.S. trade deficit. Unfortunately the U.S. has been running 
Good morning! A New York Times article reports that 
The European Union (EU) has always been a complex structure, but now it is becoming more so. Economic activity varies widely from country to country. For example, the more established economies of Germany, France and Italy are the strongest at this moment with the economies that were part of the Soviet Union, such as Romania, Hungary and the Czech Republic are much weaker. 
Perhaps no economy in the world is in such disastrous shape as Iceland. Last year, the weight of the global financial crisis crushed this island nation causing its banking system to implode, its currency to collapse 
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