TOP NEWS: Economy: July 27, 2012
- ‘Subpar’ Now Par for the Economic Course
- Libor Crime Probe in U.K. Starts as U.S. Readies Indictments
- Assurances on Euro by Central Bank Chief Lift Stocks
- For Big Drug Companies, a Headache Looms
- Avoiding Another Shutdown
Excerpts and more top stories
ECONOMIC SLOWDOWN: ‘Subpar’ Now Par for the Economic Course
Wall Street Journal - Friday’s first take on U.S. gross-domestic-product growth for the second quarter is unlikely to improve the mood: forecasters see an annualized increase of just 1.5%. Not only is that lower than a downward-revised 1.9% rate in the first quarter, but it would put the economy even farther off the growth trajectory that it typically would be enjoying three years after a recession’s end.
ECONOMIC SLOWDOWN: U.S. Economy Slowed to a Tepid 1.5% Rate of Growth
Shaila Dewan, NY Times – The United States economy grew by a tepid 1.5 percent annual rate in the second quarter, losing the momentum it had appeared to be gaining earlier this year, the government reported Friday.
ECONOMIC SLOWDOWN: US recession still worst on record but revisions show little less contraction; weaker recovery
Associated Press, Washington Post - Here’s a small consolation: The Great Recession wasn’t quite as horrendous as previously thought. The changes show the economy shrank 4.7 percent from the start of the recession in December 2007 until it ended three years ago. That’s 0.4 percentage point less than the previous estimate of 5.1 percent.
Greg Farrell and Lindsay Fortado, Washington Post through Bloomberg – The U.S. Justice Department is preparing to file charges this fall against traders from several banks in the global probe of interest rate-rigging. Meanwhile, U.K. prosecutors haven’t even decided whether they have a case.
Mark Scott, NY Times – The problems continue to mount at Barclays, as the British bank disclosed that it was facing a number of lawsuits related to the rate-rigging scandal and that regulators were investigating the company’s financial director on a different matter.
Mark Lennihan, Washington Post – In its second settlement in eight days, McLean-based Capital One Bank will pay $12 million in restitution to troops who were unlawfully denied reprieve from high interest rates, foreclosure and car repossession while on active duty.
Saabira Chaudhury, Wall Stret Journal – J.P. Morgan Chase & Co. reorganized some of its business units and reshuffled some top executives, moves the largest U.S. bank by assets said are intended to unify its Chase-branded businesses.
Kim Schoenholtz and Lawrence J. White, Bloomberg, Opinion – How to ensure that a damaging scandal won’t happen again? The answer seems straightforward: Wherever feasible, benchmarks for financial contracts should derive from actual transactions, not surveys, as is the case with Libor.
Floyd Norris, NY Times, Opinion – There is a question as to whether banking power is in danger of being broken as a result of public revulsion over the JP Morgan hedging fiasco and the Libor scandal. The banks had turned this year’s debate into one over regulations they do not like, but suddenly the issue is whether big banks should be broken up. Bank lobbyists may have to play defense, not offense, in coming months.
EUROZONE/MARKETS: Assurances on Euro by Central Bank Chief Lift Stocks
Jack Ewing, NY Times – Markets and the euro rose after Mario Draghi told a conference in London that the central bank was prepared to “do whatever it takes to preserve” the currency.
PHARMACEUTICAL COMPANIES: For Big Drug Companies, a Headache Looms
Edward Wyatt, NY Times – It would seem a business executive’s dream: legally pay a competitor to keep its product off the market for years. Congress has failed to stop it until this month. On July 16, a federal appeals court in Philadelphia issued a decision that the arrangement is anticompetitive on its face. It potentially sets up a confrontation before the United States Supreme Court.
FISCAL CLIFF: Avoiding Another Shutdown
Wall Street Journal, Opinion – Republican leaders in Congress haven’t done very well negotiating on the budget, and now a new threat looms: a showdown in the fall, before Election Day, that could force Republicans to choose between more spending and higher taxes or the risk of a government shutdown.
J.D. Harrison, Washington Post – On a largely party-line vote, the House on Thursday passed the Red Tape Reduction and Small Business Job Creation Act, which would prevent federal agencies from imposing any major new business regulations until the unemployment rate drops back to 6 percent.
BUDGET DEFICIT: Money for Nothing
Paul Krugman, NY Times, Opinion – We have a long-run budget problem, and we should be taking steps to address that problem, mainly by reining in health care costs. But it’s simply crazy to be laying off schoolteachers and canceling infrastructure projects at a time when investors are offering zero- or negative-interest financing.
TREASURY/TAX REFORM: Treasury Eyes Funds Hidden Overseas
John D. McKinnon, Wall Street Journal - The Treasury Department released new details Thursday of a plan to ferret out Americans’ global tax dodging, though some lawmakers and banks remain concerned about the initiative’s scope and regulatory costs.
MADOFF: Trustee in charge of recovering money for Madoff victims asks permission to return $2.4B more
Stephen Chernin, Washington Post – Victims of imprisoned Bernard Madoff’s Ponzi scheme could be getting back more of their stolen money. Irving Picard, the trustee in charge of liquidating Madoff’s assets, is asking a New York court for permission to distribute another $1.5 billion to $2.4 billion to investors who lost money in Madoff’s fraudulent investments.
Brian Womack, Bloomberg – Facebook Inc. (FB) plunged to a record low after its first earnings report as a public company showed a slower sales gain and narrower profit margins, failing to allay concerns over growth that have dragged down the shares.
AMAZON: Amazon’s international sales growth slows
Barney Jopson, Financial Times – The web retailer reported net income of just $7m, down 96 per cent from $191m last year, and diluted earnings per share of 1 cent.
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