TOP NEWS: Economy: July 26, 2012
- Fed Sees Both Benefits and Risks in New Moves
- US industrials warn over Europe
- Jobless Claims in U.S. Decrease, Extending July Volatility
- Dow Surges 200 Points on Draghi Comments
- Big-Bank Pioneer Now Seeks Breakup of Large Banks
Excerpts and more top stories
Binyamin Appelbaum, NY Times- Top Fed officials are coming to the conclusion that the economy is not growing fast enough to reduce the nation’s high rate of unemployment, and several members of the Fed’s policy-making committee have said additional action is needed if the economy is “stuck in the mud,” as Ben S. Bernanke, the Fed chairman, has said.
Dylan Matthews, Washington Post, Op-Ed – With the Fed potentially taking new action to try to speed up the recovery, it’s worth asking what policies it could have adopted that would have prevented the slump from getting this bad to begin with.
Binyamin Appelbaum, NY Times – A growing number of Federal Reserve officials have concluded that the central bank needs to expand its stimulus campaign unless the nation’s economy soon shows signs of improvement, including job growth.
Simon Johnson, NY Times – A powerful new voice for financial reform emerged this week – Sarah Bloom Raskin, a governor of the Federal Reserve System. In a speech on Tuesday, she laid out a clear and compelling vision for why the financial system should focus on providing old-fashioned but essential intermediation between savers and borrowers in the nonfinancial sector.
Kristina Peterson, WSJ – One big debate facing the Federal Reserve is whether the central bank should allow inflation to rise to help bring down unemployment and spur economic growth.
ECONOMY/MANUFACTURING: US industrials warn over Europe
Shannon Bond, Financial Times – The wide effects of Europe’s economic crisis were on display on Thursday as several large US manufacturers joined a growing chorus warning of slowing global growth.
ECONOMY/CYCLES: Why Kids Today Have It Worse Than Their Parents
Ben Casselman, WSJ – Today’s 20-somethings are, broadly speaking, the children of the last of the Baby Boomers, those born in the late 1950s and early 1960s. That generation, like this one, came of age in the midst of a brutal recession: The unemployment rate for 18-24 year-olds topped 17% at the end of 1982. (In 2010, it briefly crossed 18%.)
ECONOMY/MANUFACTURING: Strong aircraft demand pushes up US durable goods orders; outside transportation, orders fall
AP via Washington Post – Companies cut back on orders for long-lasting U.S. factory goods last month, outside volatile aircraft and other transportation equipment. The decline suggests businesses are losing confidence in the economy.
ECONOMY/PUBLIC-PRIVATE: America’s Two Economies
Daniel Henninger, Wall Street Journal, Op-Ed – We have two economies that compete for America’s wealth: A private economy and a public economy. The 2012 election will decide which will be subordinate to the other. One economy will lead. The other will follow.
Lorraine Woellert, Washington Post – Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, extending the period of volatility typically seen in July. Applications for jobless benefits decreased by 35,000 in the week ended July 21 to 353,000, Labor Department figures showed today.
JOBS: Where the Jobs Are
Gail Collins, NY Times, Op-Ed – “What would it be like to live in a place with an unemployment rate of 1 percent?” So I went to Williston, N.D., to find out. Radio ads urged me to embark on a new career as a bank teller, laborer, railroad conductor or cake decorator. The local Walmart has a big sign up, begging passers-by to consider starting their lives anew in retail sales. |
Chris Dieterich and Tom Kilgore, Wall Street Journal – Europe’s top central banker sparked a global rally in stocks after reassuring investors the Continent’s central bank would be vigilant about holding together the euro zone.
E.S. Browning and David Benoit, WSJ- Mr. Weill, who built Citigroup Inc. through repeated acquisitions—including the 1998 megadeal that prompted Congress to strike down a six-decade-old ban on commercial banks doing investment banking, and vice versa—on Wednesday called for the breakup of huge U.S. financial conglomerates.
BANKING/DISCLOSURE: Better Disclosure for Private Loans
NY Times Editorial- About two-thirds of bachelor’s degree recipients borrow to complete their educations. The fortunate among them rely on federal loans that offer a low, fixed-interest rate and broad consumer protections that allow them to defer payments — and stay out of default — if they lose their jobs. But many students have been roped into costlier private student loans that have variable interest rates and few consumer protections.
The Economist – Bankers to Mexican drug lords, Iran, the Taliban, a Syrian terrorist, Cuba, Sudan, North Korea and Hamas—that was the charge sheet faced by HSBC executives as they became the latest group of financiers to be hauled down to Washington, DC, for public shaming.
Charles Gasparino, Huffington Post, Opinion – Sandy Weill’s signature accomplishment during his long career on Wall Street, Citigroup, engaged in fraud on a massive scale, unfettered risk taking and then needed a massive taxpayer bailout during the 2008 financial crisis because it was so big it couldn’t be managed. Yet only now does Weill say it was all a mistake.
Lori Montgomery, Washington Post – The Senate on Wednesday narrowly approved a plan to preserve tax cuts for the middle class while letting them expire for the wealthy, a powerful if largely symbolic victory for Democrats who have been pushing to raise taxes on the rich for more than a decade.
Ezra Klein, Washington Post, Op-Ed – Something amazing happened yesterday: The Senate passed a piece of legislation. However, Senate Minority Leader Mitch McConnell said, “The only reason we won’t block [the bill] today is that we know it doesn’t pass constitutional muster and won’t become law. What today’s votes are all about,” he continued, is “showing the people who sent us here where we stand.”
TAX CUTS: Who Deserves a Tax Break?
NY Times Editorial- In a rare show of old-fashioned democracy, Senate Republicans allowed Democrats a simple-majority vote on Wednesday to pass a bill extending tax cuts on income up to $250,000 a year. Republicans, knowing the measure would be killed in the House because it raises taxes on the rich, chose not to filibuster it in hopes of “exposing” a few vulnerable Democrats to a tough vote.
ELECTION 2012: Political Perceptions: Economy Stays Cool to Obama
David Wessel, Wall Street Journal, Opinion – The economy is not President Barack Obama’s friend right now. The current pace of growth in the U.S. is so slow that it wouldn’t take much to push the economy into recession. The latest polls underscore voter anxiety. Only 27% of respondents to the latest Wall Street Journal/NBC News poll said they expect the economy to improve over the next 12 months.
PRIVATE ENTERPRISE: The Rise of The 1099 Economy: More Americans Are Becoming Their Own Bosses
Joel Kotkin, Forbes – While the economy has been miserable for small business, and many larger ones as well, the ranks of the self-employed have been growing. According to research by Economic Modeling Specialists International, the number of people who primarily work on their own has swelled by 1.3 million since 2001 to 10.6 million, a 14% increase.
Stephanie Clifford, NY Times – As young Americans move to cities, retailers that grew up in the suburbs are following them. With little room to expand in the suburbs, retailers, including Office Depot, Wal-Mart and Target, are betting that opening small city stores will help their growth.
COMMODITIES: Gold braced for renewed haven boost
Ruona Agbroko, Financial Times – Gold prices rose to a three-week high, supported by rising expectations of further monetary policy easing in the US and hopes that the European Central Bank could lend more to bail out troubled eurozone countries.
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