TOP NEWS: Economy: August 6, 2012
- Wall St Banks Prepare for Euro Break-Up
- US Jobs Report Brightens Market Mood
- Fearing an Impasse in Congress, Industry Cuts Spending
- Bernanke: Economic Data May Mask Individual Suffering
- As Libor Fault-Finding Grows, Every Bank Fends for Itself
Excerpts and more top stories
Tom Braithwaite, Dan McCrum and Patrick Jenkins, Financial Times – Wall Street banks are increasingly telling counterparties and borrowers to restructure contracts or find another bank as they prepare for the potential exit of a country from the eurozone.
BANKS: Four-year silver probe set to be dropped
Jack Farchy and Gregory Meyer, Financial Times - Ending probe would infuriate some US investors, who claim a group of large investment banks has conspired to drive the price lower.
Barry Ritholtz, NY Times, Opinion – The repeal of Glass-Steagall may not have caused the crisis — but its repeal was a factor that made it much worse. As the events of 2007 to 2009 have revealed, this erroneous belief system was a major factor leading to the credit boom and bust, as well as the financial collapse.
William D. Cohan, Bloomberg, Opinion – There is no question that bankers, traders and executives need help reining themselves in. But instead of reimplementing an old system, we should change the way they are rewarded. That means, no more Wall Streeters multimillion-dollar bonuses for taking huge risks with other people’s money or for creating and selling securities they know are fraudulent.
MARKETS: US jobs report brightens market mood
Jamie Chisholm, Financial Times – Sentiment improved after Friday’s figures showing US non-farm payrolls rose the most in five months. Perhaps equally significant was the news that unemployment edged higher to 8.3 per cent, ensuring that some in the market still see the door is open for further monetary easing from the Fed.
MARKETS: Markets buoyed by US hiring figures, renewed Spain optimism
Associated Press, Washington Post – Financial markets started the new week in optimistic mood Monday after stronger-than-expected U.S. hiring for July continued to buoy sentiment.
MARKETS: A debt-rating dud: A year after S&P strips US of AAA status, financial markets crave Treasurys
Associated Press, Washington Post – The downgrade of the U.S. government’s prized AAA bond rating threatened to sow chaos in financial markets, but a year later, S&P’s historic move looks like a non-event.
FISCALL CLIFF: Fearing an Impasse in Congress, Industry Cuts Spending
Nelson D. Schwartz, NY Times – A rising number of manufacturers are canceling new investments and putting off new hires because they fear paralysis in Washington will force hundreds of billions in tax increases and budget cuts in the coming months.
FISCAL CLIFF: The Impending Fiscal Cliff
Diagram – The U.S. national debt’s path from $5.8 trillion in 2001 to $15.9 trillion as of Aug. 1, plus two opposite scenarios for how Congress could deal with the impending fiscal cliff.
FISCAL CLIFF: Federal government pushes back on sequestration panic
Marjorie Censer, Washington Post – The government last week pushed back against contractors on how they should brace for a nearly $1 trillion cut in federal spending, arguing that mass layoff notices are unnecessary and that warnings of contract terminations are overblown.
Joshua Zumbrun, Bloomberg – “Even though some key aggregate metrics — including consumer spending, disposable income, and household net worth — have moved in the direction of recovery, it is clear that many individuals and households continue to struggle with difficult economic and financial conditions,” Bernanke said.
Robert J. Samuelson, Washington Post, Opinion – The young face two threats to their living standards. The first is the adverse effect of the Great Recession on jobs and wages, and the second is the cost of an aging America. It’s not just Social Security, Medicare and Medicaid, but also deferred maintenance on roads, bridges, water systems and power grids.
Azam Ahmed and Ben Protess, NY Times – With billions of dollars and their reputations on the line, financial institutions have been spreading the blame in recent meetings with authorities. One official involved in the case said that banks are emphasizing that “we’re not as bad as the next guy.”
GOVERNMENT BENEFITS: Measuring Mooching
Nancy Folbre, NY Times, Opinion – You might divide the American political debate into those who think the poor and middle class get too many government benefits and those who think the rich do. Many Americans, both rich and poor, finagle benefits they don’t deserve. Unfortunately, deservingness is not defined.
ECONOMIC STIMULUS: Arthur Laffer: The Real ‘Stimulus’ Record
Arthur B. Laffer, WSJ, Opinion – Policy makers in Washington and other capitals around the world are debating whether to implement another round of stimulus spending to combat high unemployment and sputtering growth rates.
Samuel Brown, William G. Gale and Adam Looney, Brookings Institution – The authors examine the tradeoffs in revenue-neutral income tax reform. They conclude that any revenue-neutral individual income tax change that incorporates the features Governor Romney has proposed would provide large tax cuts to high-income households and increase the tax burdens on middle- and/or lower-income taxpayers.
GOVERNMENT POLICY: Should the U.S. Seek More Tech Manufacturing?
Debate, NY Times, Opinion – What policies, if any, should the United States pursue to encourage high-tech manufacturers like Apple to build their products in America rather than largely in Asia?
The Common Good publishes an U.S. economy news digest every weekday, available here.