Just because the dollar posted its biggest gain against the euro in almost eight years doesn't mean the U.S. currency won't continue to be plagued by the nation's slowing economy, widening budget and trade deficits and negative inflation-adjusted interest rates.
The 4 percent surge against the single European currency this month was enough to prompt Bank of America Corp. to tell its customers to exit trades betting on more gains. Morgan Stanley still forecasts the greenback will approach a record low by October as the U.S. housing slump and credit-market losses keep the Federal Reserve from raising interest rates this year.
Barclays Plc in London and New York-based Merrill Lynch & Co. said trading patterns suggest the dollar's 5.1 percent gain in the past three weeks measured by an index of six major trading partners can't be sustained.
Read Complete Story
Monday, August 11, 2008
FDIC Fund Strained by Bank Failures May Have to Raise Premiums
The failure of IndyMac Bancorp Inc. and seven other banks this year may erase as much as 17 percent of a government insurance fund and raise premiums for all banks, from Franklin National of Minneapolis to Bank of America Corp.
The closing of IndyMac in July, the third-biggest U.S. bank failure, may cost the fund $4 billion to $8 billion, in addition to an estimated $1.16 billion for seven closures through Aug. 1. Premiums for deposit insurance will likely rise, FDIC Chairman Sheila Bair said in a July 30 interview. A decision on the increase is due by the fourth quarter.
``It's going to be a bloody, expensive mess for the banking industry,'' said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. ``Healthy banks are paying for the mistakes made by failed banks.''
Read Complete Story
The closing of IndyMac in July, the third-biggest U.S. bank failure, may cost the fund $4 billion to $8 billion, in addition to an estimated $1.16 billion for seven closures through Aug. 1. Premiums for deposit insurance will likely rise, FDIC Chairman Sheila Bair said in a July 30 interview. A decision on the increase is due by the fourth quarter.
``It's going to be a bloody, expensive mess for the banking industry,'' said Bert Ely, president of Ely & Co. Inc., a bank consulting firm based in Alexandria, Virginia. ``Healthy banks are paying for the mistakes made by failed banks.''
Read Complete Story
US Appeals against WTO Verdict
The United States has appealed a World Trade Organization decision upholding Indian import taxes on wine and spirits citing that its findings were based on erroneous findings on issues of law when it rejected in February the US complaint over extra duties applied by India.
The U.S. appeal was filed last week and has been posted on the WTO's Web site. US had made it clear at the time of rejection of its claim that it would appeal the decision. At the time the original complaint was filed, the issue related only to the Additional Duties.
The verdict was not a total loss for the United States because India did waive Additional duties in July 2007 buckling under heavy pressure from the US and Europe. On 24 May 2007, the United States had requested the establishment of a panel which was composed on 3 July 2007. Next day, the government had announced eliminating the Additional Duties.
EU had dropped its complaint as a result. However, Washington continued to press its case, numbered DS360R. Its complaint was rejected by WTO in February this year.
Read Complete Story
The U.S. appeal was filed last week and has been posted on the WTO's Web site. US had made it clear at the time of rejection of its claim that it would appeal the decision. At the time the original complaint was filed, the issue related only to the Additional Duties.
The verdict was not a total loss for the United States because India did waive Additional duties in July 2007 buckling under heavy pressure from the US and Europe. On 24 May 2007, the United States had requested the establishment of a panel which was composed on 3 July 2007. Next day, the government had announced eliminating the Additional Duties.
EU had dropped its complaint as a result. However, Washington continued to press its case, numbered DS360R. Its complaint was rejected by WTO in February this year.
Read Complete Story
Slump in U.S. to Worsen as Consumers Get `Squeezed'
The U.S. economic slump will extend into 2009 as the longest expansion in consumer spending on record comes to an end, according to a Bloomberg News survey.
The world's largest economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed from Aug. 1 to Aug. 8.
Household spending, which has grown every quarter since 1992, is projected to stall in the last three months of the year as the impact of tax rebates fades, wages fail to keep up with inflation and property values fall. The jobless rate, now at 5.7 percent, will reach a five-year high of 6 percent in early 2009.
Read Complete Story
The world's largest economy will grow at an average 0.7 percent annual pace from July through December, half the gain in the first six months of the year, according to the median forecast of 50 economists surveyed from Aug. 1 to Aug. 8.
Household spending, which has grown every quarter since 1992, is projected to stall in the last three months of the year as the impact of tax rebates fades, wages fail to keep up with inflation and property values fall. The jobless rate, now at 5.7 percent, will reach a five-year high of 6 percent in early 2009.
Read Complete Story
Thursday, August 7, 2008
Foreclosure crisis: The $4 billion fix
Washington will give funds to states and cities to rehab houses. Proponents say it will help stabilize neighborhoods, but others say it's too little to do much good.
City officials and community activists can't wait to get their hands on nearly $4 billion the federal government is about to inject into blighted neighborhoods suffering from record foreclosures.
Opponents of the measure say the paltry sum won't do much good considering the number of vacant homes on the market - one million families are expected to lose their homes this year - and will more likely turn into a political boondoggle.
It remains to be seen which side is right. But the program - part of the massive housing rescue bill Bush enacted last month despite his own misgivings - will serve as one test of Washington's ability to mitigate the foreclosure crisis.
Read Complete Story
City officials and community activists can't wait to get their hands on nearly $4 billion the federal government is about to inject into blighted neighborhoods suffering from record foreclosures.
Opponents of the measure say the paltry sum won't do much good considering the number of vacant homes on the market - one million families are expected to lose their homes this year - and will more likely turn into a political boondoggle.
It remains to be seen which side is right. But the program - part of the massive housing rescue bill Bush enacted last month despite his own misgivings - will serve as one test of Washington's ability to mitigate the foreclosure crisis.
Read Complete Story
July retail sales weaken as tax rebates dry up
Retailers, including Wal-Mart Stores Inc and Target Corp, posted disappointing July sales results on Thursday as shoppers ran out of extra tax rebate cash, diminishing the outlook for the current back-to-school shopping season.
The sales results, along with cautious outlooks for August, left little hope that there would be a lasting boost from tax rebate checks to prop up consumers headed into the back half of the year and the all-important December holiday season.
"The stimulus (checks) really had a marginal effect at best and it has run its course and there's no carry-through," said Retail Metrics President Ken Perkins. "It's difficult to see where some sort of boost in spending is going to come from."
Read Complete Story
The sales results, along with cautious outlooks for August, left little hope that there would be a lasting boost from tax rebate checks to prop up consumers headed into the back half of the year and the all-important December holiday season.
"The stimulus (checks) really had a marginal effect at best and it has run its course and there's no carry-through," said Retail Metrics President Ken Perkins. "It's difficult to see where some sort of boost in spending is going to come from."
Read Complete Story
U.S. weekly initial jobless claims rise to 455,000
Claims stay unusually high as more workers take advantage of benefits
First-time claims for jobless benefits remained unusually high in the latest week as more workers took advantage of states' efforts to sign them up for unemployment insurance, the Labor Department said Thursday.
Claims for the week ended Aug. 2 rose to 455,000, a gain of 7,000 from the prior week. The figure was the highest in more than six years.
Many economists see claims above 400,000 as a sign of recession.
Investors reacted negatively to the uptick in unemployment claims. See Market Snapshot.
Read Complete Story
First-time claims for jobless benefits remained unusually high in the latest week as more workers took advantage of states' efforts to sign them up for unemployment insurance, the Labor Department said Thursday.
Claims for the week ended Aug. 2 rose to 455,000, a gain of 7,000 from the prior week. The figure was the highest in more than six years.
Many economists see claims above 400,000 as a sign of recession.
Investors reacted negatively to the uptick in unemployment claims. See Market Snapshot.
Read Complete Story
Subscribe to:
Posts (Atom)