TOP NEWS: Economy: July 30, 2012
- Would a Big Bank Breakup Lead to a 3rd Rate U.S.?
- US Profit Streak Hit By Global Weakness
- The 1.5% Presidency
- Federal Spending Cutbacks Slow Recovery
- Fed Looks to Cut Interest On Reserves After ECB Move
Excerpts and more top stories
Suzanne McGee, Fiscal Times, Opinion – The very fact that Sandy Weill now appears to believe that the banks he helped spawn are both too big to manage and too big to be allowed to fail has given renewed impetus to banking’s critics.
BANKS: Bank Breakups: Not So Fast
Dan Fitzpatrick, Robin Sidel, & Victoria McGrane, WSJ – Long before Sanford Weill suggested last week that big banks should split up, Bank of America Corp. executives and directors considered the idea and then decided against it, said people close to the nation’s second-biggest bank by assets.
BANKS/LIBOR: Britain Begins Review of Libor
Mark Scott, NY Times – The British government on Monday officially announced a review into the rate-setting process at the center of the recent financial scandal. The review comes as British and American regulators face mounting scrutiny for their passive approach in policing benchmark rates, including the London interbank offered rate, or Libor.
Neil Gough, NY Times – Profit at HSBC Holdings dropped nearly 9 percent in the first half of the year, as the big bank deals with the fallout from a money-laundering investigation and a settlement over selling inappropriate financial products.
ECONOMIC SLOWDOWN: US Profit Streak Hit By Global Weakness
Kate Linebaugh, WSJ – Bid adieu to growing profits. Slowing economies from the U.S. to China, increasingly wary shoppers, recession in much of Europe and a stronger dollar could bring to an end at least 10 continuous quarters of profit growth for America’s biggest companies.
ECONOMIC SLOWDOWN: The 1.5% Presidency
Opinion, WSJ – President Obama didn’t comment on Friday’s report of declining growth in the second quarter, and that’s no surprise. The economic story of his Presidency is by now familiar: a plodding recovery that has taken its third dip in three years and is barely raising incomes for most Americans.
ECONOMIC SLOWDOWN: Behind the Economic Pessimism
Robert J Samuelson, Washington Post, Opinion – The real obstacles to a vigorous recovery are compounded by this shrunken confidence in the power of economics. The dangers — resumed recession or deflation (declining prices) — arise from their interaction. Low confidence will subvert recovery; an aborted recovery will subvert confidence.
ECONOMIC SLOWDOWN: S&P 500 Little Changed Amid Concern Over Economic Outlook
Rita Nazareth, Bloomberg – U.S. stocks were little changed amid concern a rally that gave the Standard & Poor’s 500 Index its biggest two-day gain in 2012 has outpaced the economic outlook. “Recovery continues to pace, but there’s no boom in sight,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
FISCAL CLIFF: Federal Spending Cutbacks Slow Recovery
Ben Casselman & Connor Dougherty, WSJ – Falling military spending and the end of federal stimulus programs are further slowing the already weak U.S. economic recovery. In recent weeks, policy debate in Washington has turned to the looming “fiscal cliff,” billions of dollars in spending cuts and tax increases set to take effect at the start of the new year.
FISCAL CLIFF: What is the Fiscal Cliff?
Jonathan Masters, Council on Foreign Relations – The “fiscal cliff” is a term used in discussions of the U.S. fiscal situation to describe a bundle of momentous tax increases and spending cuts that are due to take effect at the end of 2012 and early 2013. In total, the measures are set to automatically slash the federal budget deficit by $607 billion or approximately 4 percent of GDP between FY 2012 and FY 2013, according to the Congressional Budget Office (CBO).
Caroline Salas Gage & Liz Capo McCormick, Bloomberg – Federal Reserve Chairman Ben Bernanke may be taking another look at cutting the interest rate the Fed pays on bank reserves to bring down short-term borrowing costs and spur the slowing U.S. expansion.
Robin Harding, Financial Times – Another summer, another US slowdown, another Federal Reserve meeting to decide what to do about it. The drama has become rather routine.
CORPORATION PROFITS: Dollar’s Strength Eats Into the Bottom Line
Chana R Schoenberger & Nicole Hong, WSJ – The strong dollar is giving U.S. companies’ profits a beating. Corporations in wide-ranging fields—including Colgate-Palmolive Co., Amazon.com Inc. and Dow Chemical—are reporting that the dollar’s gains are affecting their profits, reducing the value of their overseas sales when converted back to U.S. currency.
MARKETS: Giant Stocks Are Walking Tall Again
Paul J Lim, NY Times – Stocks around the world have been struggling lately, but one group of equities may ultimately benefit from all the fear and uncertainty: so-called megacaps. Ever since worries over the European debt crisis began to escalate more than a year and a half ago, the biggest American blue-chip stocks have been among the few bright spots for investors.
CAPITALISM: Why Capitalism Has an Image Problem
Charles Murray, WSJ, Opinion – Capitalism has lifted the world out of poverty because it gives people a chance to get rich by creating value and reaping the rewards. Who better to be president of the greatest of all capitalist nations than a man who got rich by being a brilliant capitalist?
TRANSPORTATION: The Not-So-Mighty Mississippi: How the River’s Low Water Levels Are Impacting the Economy
Josh Sanburn, TIME – For those who make their livings along the Mississippi River, helping to ship many of the country’s most vital commodities, this year’s drought has inevitably raised the specter of 1988. That’s when the river got so low that barge traffic came to a standstill — and the industry lost $1 billion. Unfortunately, 2012 could be worse.
Scott Thurm, Shayndi Raice, & Telis Demos, WSJ – Investors who six months ago clamored for shares of social-media firms have turned against them with a vengeance as concerns about the sector mount.
GENERAL MOTORS: A Firebrand Departs from GM
Sharon Terlep & Suzanne Vranica, WSJ – General Motors Co.’s tumult deepened on Sunday when the auto maker ousted its global marketing chief, Joel Ewanick, head of one of the largest advertising budgets in the U.S. and a key player in the company’s restructuring efforts. GM told Mr. Ewanick that he was being removed for failing to properly vet the financial details of a European soccer-sponsorship deal that he struck recently, according to people familiar with the matter.
The Common Good publishes an U.S. economy news digest every weekday, available here.