Enda Kenny's in-tray is full of horrors. First up, on Monday, were keenly awaited mortgage arrears figures which showed 10% of homeowners are now struggling to pay.
New mortgage arrears figures released on Monday by the Central Bank show 6% of the country's households are now in mortgage arrears – 44,508 homeowners have not made a monthly payment for more than 90 days.
This compares with 28,603 in arrears the previous year to the end of December 2009.
Worse – there are a further 35,205 who have done private deals with banks – to pay interest only, get mortgage holidays etc. That's 80,000 in total who are in arrears or have restructured mortgages, meaning 10% of the total mortgage population are in trouble.
These figures will be a cold shower for Kenny and his team, because they underline how real the prospect of a second wave of debt default is, something economist Morgan Kelly predicted last year when he suggested 19th century-style social revolt from the middle-classes.
February 28, 2011
February 27, 2011
Nomura sees oil at $200
Irish new government pressing for bondholders haircut
Image via WikipediaFrom the Guardian:
Bondholders face pressure from new Irish government to share cost of bailout by taking 'haircut' on sovereign debt
Nervous bondholders are braced for a showdown with the new Irish government as fears grow that politicians will demand massive cuts in repayments on sovereign debt.
Investors face losing billions of pounds if proposals to renege on loan repayments on Ireland's bank debts and its sovereign bonds are put into action.
Enda Kenny, leader of Ireland's largest opposition party, Fine Gael, which was expected to be the biggest party after Friday's election, told voters during the campaign that senior bank bondholders should share the cost of bailing out the Irish financial system.
Interviewed by the state broadcaster RTÉ, he said: "We have made the point about unsecured bondholders that it would be absurd that Irish taxpayers should be asked to pay 100% of this without these people having to take their share of the burden."
Venezuela risk of default in 2012
The chief cause of Venezuela’s travails has been Mr Chávez’s pillaging of PDVSA, the state oil firm. He has packed it with loyalists, starved it of investment and used it for social spending, cutting its output from 3.3m barrels per day (b/d) in 1998 to around 2.25m b/d, according to industry estimates. Of that, some 1m b/d is sold at subsidised prices at home or to regional allies, leaving just 1.25m b/d for full-price exports.
Meanwhile, the president’s hostility to business has devastated the rest of the economy. He has nationalised hundreds of companies and trumped up charges against their owners, causing much of Venezuela’s private sector to shut up shop and flee. As a result, the country has seen vast capital flight, and must import many goods that it used to produce. Non-oil exports have ground to a halt: petroleum now accounts for 92% of its dollar intake.
read more here
Inequality and exploitation
Whether national populations realize it or not, these uprisings are against systemic global economic policies that are strategically designed to exploit the working class, reduce living standards, increase personal debt and create severe inequalities of wealth. These global uprising, which have only just begun, are the first wave of the inevitable reaction to the implementation of a centralized worldwide Neo-Feudal economic order.
The global banking cartel, centered at the IMF, World Bank and Federal Reserve, have paid off politicians and dictators the world over — from Washington to Greece to Ireland and Egypt.
In country after country, they have looted national economies at the expense of local populations, consolidating wealth in unprecedented fashion – the top economic one-tenth of one percent is currently holding over $40 trillion in investible wealth, not counting an equally significant amount of wealth hidden in offshore accounts.
According to new World Bank data, since June 2010, “Rising food have pushed about 44 million people into poverty in developing countries.”
Income inequality has reached a record level within Egypt, as Pat Garofalo explained:
“One of the driving factors behind the protests is the… growing sense of inequality. ‘They’re all protesting about growing inequalities…. The top of the pyramid was getting richer and richer,’ said Emile Hokayem of the International Institute for Strategic Studies in the Middle East.
As Yasser El-Shimy, former diplomatic attaché at the Egyptian Ministry of Foreign Affairs, wrote in Foreign Policy, ‘income inequality has reached levels not before seen in Egypt’s modern history.’”
February 26, 2011
Euro crisis timeline 2011
If you are wondering what are the key events that will unfold in 2011 well check nice chart below from Fitch:
Charlie Brooker on Berlusconi
It seems Italy's main cultural export today is the tragic comedy of Berlusconi; another irreverent look at the Italian Prime Minister. Enjoy!
Middle East Oil Crisis
Libya revolution has shown how frail is our economy and how even small sized protests in a small but important country as Bahrain can send shock waves all over the world. As more protests are sure to spread to other countries in the region (with Saudi of course being the key domino whose potential fall would send crude well over $200), below you can find some stats on who is who in the vital oil business. All attention is shifting again to developments in Bahrain, which contrary to the media black out, have not been put under control at all. There are also unconfirmed rumors that Al Jazeera may have allegedly received a "request" from Saudi Arabia to not cover recent events in the region and this is another indication of how tense the situation is getting in the Arabian peninsula.
read more here
read more here
Oil price and GDP calculator
A great chart from Reuters which correlates the change of oil prices to the corresponding change in world GDP (indicatively every $10 change in in crude results in an estimated range of 0.5-1.0% inverse change in global GDP).
Click on the picture to activate the calculator.
Click on the picture to activate the calculator.
Italy tops the Risk Index for 2011
Risk analysis firm Maplecroft just released its new fiscal risk index ranking of 163 countries. Europe trumps all other regions with 11 out of twelve courtiers rated as "extreme risk." However, quite surprisingly, only one PIIGS country--Italy which takes the top spot--is in the top 12.
The others include many big economies in Europe - Belgium (2), France (3), Sweden (4), Germany (5), Hungary (6), Denmark (7), Austria (8), United Kingdom (10), Finland (11) and Greece (12). Japan at No. 9 is the only other country not in Europe within the highest risk category (See map below).
Without significant adjustments, such as raising taxes or reducing spending, countries risk going bankrupt. One such adjustment has already been seen in the UK and Germany where recent government initiatives have increased the state pension age to encourage people to work for longer as a way to alleviate pressure on public finances.
Certainly Governor of the Bank of Italy, Mario Draghi had this on his mind when today he addressed during a speech in Verona the current situation of Italy. He clearly stated that Italy has not been growing in the last 15 years, salaries are stuck to 80's levels, the unemployment among the Italian youth has reached 30%, the only support young enemployed italians receive is from their families since no dole or benefits exists for them, the savings base which has always been the backbone of italian families' wealth is being drained by the inevitable costs of supporting the unemployed youth well over their 30th birthday. Furthermore widespread corruption and cronyism are practically rotting the society and make impossible any much-needed reform of the inefficient and corrupted economy. No wonder given the current scenario that Italy is at the top of the international investors' worries.
The others include many big economies in Europe - Belgium (2), France (3), Sweden (4), Germany (5), Hungary (6), Denmark (7), Austria (8), United Kingdom (10), Finland (11) and Greece (12). Japan at No. 9 is the only other country not in Europe within the highest risk category (See map below).
Without significant adjustments, such as raising taxes or reducing spending, countries risk going bankrupt. One such adjustment has already been seen in the UK and Germany where recent government initiatives have increased the state pension age to encourage people to work for longer as a way to alleviate pressure on public finances.
Certainly Governor of the Bank of Italy, Mario Draghi had this on his mind when today he addressed during a speech in Verona the current situation of Italy. He clearly stated that Italy has not been growing in the last 15 years, salaries are stuck to 80's levels, the unemployment among the Italian youth has reached 30%, the only support young enemployed italians receive is from their families since no dole or benefits exists for them, the savings base which has always been the backbone of italian families' wealth is being drained by the inevitable costs of supporting the unemployed youth well over their 30th birthday. Furthermore widespread corruption and cronyism are practically rotting the society and make impossible any much-needed reform of the inefficient and corrupted economy. No wonder given the current scenario that Italy is at the top of the international investors' worries.
Shock Doctrine
Shock Doctrine, U.S.A., by Paul Krugman, Commentary, NY Times: ...Naomi Klein’s best-selling book “The Shock Doctrine” ... argued that ... right-wing ideologues have exploited crises to push through an agenda that has nothing to do with resolving those crises, and everything to do with imposing their vision of a harsher, more unequal, less democratic society.
Which brings us to Wisconsin 2011, where the shock doctrine is on full display.
In recent weeks, Madison has been the scene of large demonstrations against the governor’s budget bill, which would deny collective-bargaining rights to public-sector workers. Gov. Scott Walker claims that he needs to pass his bill to deal with the state’s fiscal problems. But his attack on unions has nothing to do with the budget. In fact, those unions have already indicated their willingness to make substantial financial concessions — an offer the governor has rejected.
What’s happening in Wisconsin is, instead, a power grab — an attempt to exploit the fiscal crisis to destroy the last major counterweight to the political power of corporations and the wealthy. And the power grab goes beyond union-busting. The bill in question is 144 pages long, and there are some extraordinary things hidden deep inside.
For example, the bill includes language that would allow officials appointed by the governor to make sweeping cuts in health coverage for low-income families without having to go through the normal legislative process.
And then there’s this... The state of Wisconsin owns a number of plants supplying heating, cooling, and electricity to state-run facilities (like the University of Wisconsin). The language in the budget bill would, in effect, let the governor privatize any or all of these facilities at whim. Not only that, he could sell them, without taking bids, to anyone he chooses. And note that any such sale would, by definition, be “considered to be in the public interest.”
February 25, 2011
US Municipal Budget crisis turning nastier
 |
| Ruins of the Packard Plant in Detroit |
Allen Park, Michigan, a town of about 28,000, sent layoff notices to its entire fire department. This is a procedural move because the town is unsure how many it will need to lay off. However, the situation looks grim.
Providence Rhode Island school district has a huge budget shortfall of $40 million. It does not know how many teachers it will need to layoff so instead, Providence plans to pink slip all teachers.The school district plans to send out dismissal notices to every one of its 1,926 teachers, an unprecedented move that has union leaders up in arms. In a letter sent to all teachers Tuesday, Supt. Tom Brady wrote that the Providence School Board on Thursday will vote on a resolution to dismiss every teacher, effective the last day of school.
Detroit has been bankrupt for years. It simply refuses to admit it. Detroit's schools are bankrupt as well. A mere 25% of students graduate from high school. Mayor Bing's latest plan is to cutoff city services including road repairs, police patrols, street lights, and garbage collection in 20% of Detroit.
February 24, 2011
Credit Default Swaps Casino coming soon for everyone!
Image by Getty Images via @daylifeCredit Event Binary Options contracts allow investors to express an opinion on whether a company will experience a "credit event" (bankruptcy). Due to inverse correlations between credit and equity markets, CEBO® contracts can be used as a hedging tool for individual stocks. The contracts also provide the advantages of price transparency available through a regulated exchange, currently unavailable in over-the-counter credit default swaps markets.
A CEBO contract has just two possible outcomes - a payout of a fixed amount if a credit event occurs or nothing if a credit event does not occur.
This sudden opening of the market to retail bets on corporate bankruptcy will have huge bilateral repercussions on every single asset class and we can only imagine what will happen when ordinary citizen will start gambling on companies defaults, it seems the race of Wall Street to compete with the Gambling business is taking a new turn, de facto encouraging everyone to bandwagon on the derivatives insanity that has brought us down.
Oil Shock risk as crisis in Middle East escalate
Image via WikipediaBarclays Capital said 1m b/d of Libyan output is "shut in", with the other 0.6m at risk. While Saudi Arabia can step in by raising output, this takes time and its oil is not a substitute for Libya's "sweet crude".
Some analysts fear the underlying picture is worse that officially recognised, doubting Saudi claims of ample spare capacity. A Wikileaks cable cited comments by a geologist for the Saudi oil giant Aramco that the kingdom's reserves had been overstated by 40pc. A second cable cited US diplomats asking whether the Saudis "any longer have the power to drive prices down for a prolonged period".
Jeremy Leggett, a leader of the UK industry task force on peak oil and energy security, said the Mid-East crisis "shows the extreme fragility of the global system. People don't realise how close we are to a potential precipice if this unrest reaches critical mass in enough OPEC countries. Governments need to draw up emergency plans and get cracking on proactive measures while we still have time," he said.
Nomura said a shut-down in both Libya and Algeria would cut global supply by 2.9m b/d and reduce OPEC spare capacity to 2.1m b/d, comparable with levels at the onset of the Gulf War and worse than during the 2008 spike, when prices hit $147.
Charles Robertson at Renaissance Capital said the real concern nagging investors is what will happen in Saudi Arabia's oil-rich Eastern Province, the home of the kingdom's restless Shi'ite minority. The Saudis produce 11.6pc of world output, but a much higher share of exports.
February 23, 2011
Gaddafi could have ordered sabotage of oil facilities
Image via WikipediaShould he proceed and destroy the country's oil infrastructure, which exports over 1.5 million barrels of crude a day, mostly to Italy, Europe could face big troubles.
China energy demand set to create conflicts
Image via WikipediaAt the current rates of growth of US and China oil imports and consumption, China's oil consumption will match US oil imports by 2016-2017. China's oil imports and consumption will reach parity with the US by 2021-2022, at which point the US and China will together consume 60% of peak global oil production (assuming 73-75M bbl/day) versus 37-38% today, leaving the rest of the world to adapt to receiving the remaining 40% (35-40% less than is received today).
However, at the same trend rates of imports and consumption, the US and China will consume 80% of global oil production by the late '20s to early '30s, leaving the rest of the world just 20% of supplies, and China is on track to consume the entire world's oil production by the '40s-'50s; needless to say, this cannot occur.
February 22, 2011
Italian stock Exchange shut down after Libya fears treathen collapse
Image via WikipediaFT reports: "Borsa Italiana, the Italian exchange, failed to open as usual on Tuesday amid concerns in the Italian broking community about possible fallout from turmoil in Libya. The outage, which left brokers unable to process orders, came a day after the main Italian stock market index closed down 3.6 per cent, making it the worst performing European market on Monday. Traders in London said the failure to open meant that the crucial opening auction, which sets initial prices at the Borsa, had also not taken place. Yet there was growing demand from investors to trade certain blue chip Italian stocks." Following up with a European market participant we got the following: "stock exchange suspension has been ordered to handle massive unwind of positions in some of the largest index components. Significant dislocation occurring on swap and option market on the FTSE MIB as well.... " In other words, when faced with a huge deluge of selling, best to implement the biggest known circuit breaker of all and just shut it down. In the meantime, UniCredit CDS trading away from Italy was 3% wider this morning as concerns about that "7%" spook risk holders.
And Bloomberg's take:
Trading on the Italian exchange remained halted because of “technical issues” after the benchmark FTSE MIB Index fell the most in eight months yesterday on concern Libya’s unrest may affect Italian companies.They are trying to stop the ship before crashing on the cliff, good luck!
Borsa Italiana SpA, owned by London Stock Exchange Group Plc, said in a statement on its website that “restoring operations” are underway after stocks failed to open and the futures market was halted at 12:10 p.m. All markets are suspended, the Milan bourse said in a separate statement.
The trading suspension “is something unacceptable,” said Francesco Vercesi, a money manager at Fiduciaria Orefici Sim SpA in Milan. Investors were permitted to cancel orders submitted before the scheduled opening, the exchange said. Futures trading on the FTSE MIB was temporarily halted Jan. 3 because of technical “issues.”
The FTSE MIB yesterday lost 3.6 percent to 22,230.2, the biggest decline since June 29. Impregilo SpA, the country’s largest construction company, plummeted 6.2 percent to 2.31 euros, the biggest loss since April 2009. The company has 1 billion euros ($1.4 billion) of projects in Libya, according to Milan broker Equita Sim SpA. UniCredit SpA, the nation’s biggest bank, sank 5.8 percent to 1.87 euros, the largest loss since May.
UniCredit was down 2.1 percent to 1.83 euros at 12:44 p.m. local time on Chi-X Europe Ltd., Europe’s largest alternative trading system. Eni, Europe’s fourth-biggest oil company, was down 2 percent to 17.09 euros. Impregilo was down 6.3 percent to 2.16 euros.
South Korea banking panic trigger run on deposits
Image via WikipediaChina Post reports that: "South Korea suspended operations at four more savings banks on Saturday after runs developed as customers rushed to get at their money despite official assurances the financial sector was secure."
The Financial Services Commission (FSC) said Saturday it was suspending three affiliates of Busan Savings Bank — Jungang Busan Savings Bank, Busan II Savings Bank and Jeonju Savings Bank — as well as Bohae Bank for six months each. “Considering recent waves of deposit withdrawals, available liquidity, remaining deposits and capacity to borrow, the FSC concluded that they might face a situation where they are unable to pay customers,”
Busan is the country's biggest savings bank, with assets worth 3.74 trillion won (US$3.4 billion).
Last month, regulators shut down Samhwa Mutual Savings Bank which became insolvent because of soured property loans.
Kim Seok-dong, the chairman of the Financial Services Commission, flew to Busan yesterday to stem massive withdrawals from savings banks after his agency suspended another four over the weekend.
The port city of Busan has emerged as the epicenter in the savings bank crisis after operations of the Busan Savings Bank group were suspended due to a capital shortage.
Kim vowed to make a personal deposit of 20 million won ($17,864) to convince depositors that the bank was financially sound.
In total, seven of the country’s 105 savings banks have been suspended.
Mugabe's crackdown on Al Jazeera and BBC
Image via WikipediaPlease consider Arrests in Zimbabwe for Seeing Videos
Dozens of students, trade unionists and political activists who gathered to watch Al Jazeera and BBC news reports on the uprisings that brought down autocrats in Tunisia and Egypt have been arrested on suspicion of plotting to oust President Robert Mugabe of Zimbabwe.
James Sabau, a spokesman for the police force, which is part of the security services controlled by Mr. Mugabe’s party, was quoted in Monday’s state-controlled newspaper as saying that the 46 people in custody were accused of participating in an illegal political meeting where they watched videos “as a way of motivating them to subvert a constitutionally elected government.”
The evidence seized by the police included a video projector, two DVD discs and a laptop.
Lawyers for the men and women in custody said they had not yet been formally charged but had been advised that they might be accused of “attempting to overthrow the government by unconstitutional means,” a crime punishable by up to 20 years in prison.
Libya crisis threatening to derail economy
Image via WikipediaThe price of gold jumped $17.60 an ounce today to $1406 an ounce– much nearer its previous peak over $1420. Silver, as well, jumped over $2.00 an ounce to $33.91, precisely the scenario to make silver traders ecstatic. Meanwhile, crude oil, the commodity most directly affected by the intense political unrest, ran up over 5% in price in London to $107.60 a barrel. The last time oil sold at this level was in 2008, just on the eve of an approaching bubble at the $148 a barrel level.
read more here
February 21, 2011
European political crisis unfolding
Eventful months approaching. The outcome of the Hamburg election is nothing short of a disaster for Angela Merkel and her ruling CDU party. Bloomberg reports that "Chancellor Angela Merkel’s party lost control of Hamburg, Germany’s richest state, in the first of seven state votes this year and this threaten to limit her ability to respond to Europe’s debt crisis.
The following declaration of intent is not going to calm down markets:
“We believe that Ireland may be left with no option, in the absence of a renegotiated deal, but to write down the value of the bonds in the Irish banks or face the prospect of a hugely damaging sovereign default”
Italy is on the brink with its Prime Minister indicted for child prostitution and set to stand trial in April.
The Italian Government is wobbling and early election could materialize in springs.
Investors are nervous about Italy. Even before the financial crisis, Italy’s growth rates lagged behind those of its European peers, sunk by pervasive corruption and burdensome bureaucracy at every level of government. It needs a credible government that can ask for tough sacrifices at home, patience from creditors abroad and support from other European governments.
Italy has one of the highest absolute debt levels in the euro zone and meeting its refinancing needs for the next three years would cost in excess of 800 billion euros.
From Bloomberg:
Irish elections are next this week and the current debate on the renegotiation of the bailout deal is not promising any respite to the current market volatility. Sinn Fein said it would seek a referendum on the euro rescue deal, which would put the entire banker rescue operation codenamed "Dublin" in jeopardy. Party President Gerry Adams said the country could not afford to draw down the 85 billion euro loan.The CDU took less than half its tally at the last Hamburg election three years ago. The results are “painful” for the CDU, Mayor Christoph Ahlhaus said in comments broadcast live, congratulating his Social Democratic opponent Olaf Scholz, a former Labor Minister in Merkel’s first-term government.
“It’s a warning to Merkel,” said Carsten Brzeski, an economist at ING Groep NV in Brussels. “If she has to draw any lesson, it probably will be to get tougher at the European level to show something to German voters,” he said. “There is no room for Merkel to come home from Brussels on March 25 with anything that could look or smell like a defeat.”
The following declaration of intent is not going to calm down markets:
“We believe that Ireland may be left with no option, in the absence of a renegotiated deal, but to write down the value of the bonds in the Irish banks or face the prospect of a hugely damaging sovereign default”
- Fine Gael, Irish Opposition Party, February 2, 2011
Italy is on the brink with its Prime Minister indicted for child prostitution and set to stand trial in April.
The Italian Government is wobbling and early election could materialize in springs.
Investors are nervous about Italy. Even before the financial crisis, Italy’s growth rates lagged behind those of its European peers, sunk by pervasive corruption and burdensome bureaucracy at every level of government. It needs a credible government that can ask for tough sacrifices at home, patience from creditors abroad and support from other European governments.
Italy has one of the highest absolute debt levels in the euro zone and meeting its refinancing needs for the next three years would cost in excess of 800 billion euros.
At around 118 percent of gross domestic product, Italy's public debt is the second highest in the euro zone after Greece.
February 20, 2011
Abu Dhabi's cultural mega-project
It seems Abu Dhabi has joined Dubai in the race for extravaganza and construction bubbles, here the latest project currently in construction in the Emirate:
The western corner of Saadiyat Island has been designated as Abu Dhabi's cultural district. That almost understated description belies the ambition behind the project. This is a cultural district like no other. Over the next five years, Saadiyat's skyline will be transformed by a succession of hugely prestigious landmarks, piloted by some of the world's leading architects: a Guggenheim Museum designed by Frank Gehry; the Louvre Abu Dhabi designed by Jean Nouvel; a performing arts center by Zaha Hadid; the Zayed National Museum designed by Norman Foster; and a Maritime Museum by the Japanese master Tadao Ando.
It will be the world's largest single concentration of cultural institutions of this caliber. This is a country that is becoming used to making statements through superlatives and records. It is hoping to attract millions of visitors who will help support an economy that is, some would say, dangerously dependent on just one source, its oil revenue (pessimists predict a fall in the region's oil production within 15 to 20 years).
The Saadiyat development, estimated at $27 billion, will also include luxury resorts, golf and beach clubs, and a nature reserve.
But Saadiyat is more than a tourist initiative. The implications of its successful development are potentially more profound than that. The cultural district project aims to redefine and reposition Abu Dhabi's place in the world.
The western corner of Saadiyat Island has been designated as Abu Dhabi's cultural district. That almost understated description belies the ambition behind the project. This is a cultural district like no other. Over the next five years, Saadiyat's skyline will be transformed by a succession of hugely prestigious landmarks, piloted by some of the world's leading architects: a Guggenheim Museum designed by Frank Gehry; the Louvre Abu Dhabi designed by Jean Nouvel; a performing arts center by Zaha Hadid; the Zayed National Museum designed by Norman Foster; and a Maritime Museum by the Japanese master Tadao Ando.
It will be the world's largest single concentration of cultural institutions of this caliber. This is a country that is becoming used to making statements through superlatives and records. It is hoping to attract millions of visitors who will help support an economy that is, some would say, dangerously dependent on just one source, its oil revenue (pessimists predict a fall in the region's oil production within 15 to 20 years).
The Saadiyat development, estimated at $27 billion, will also include luxury resorts, golf and beach clubs, and a nature reserve.
But Saadiyat is more than a tourist initiative. The implications of its successful development are potentially more profound than that. The cultural district project aims to redefine and reposition Abu Dhabi's place in the world.
Some interesting photos below:
February 19, 2011
Why Isn't Wall Street in Jail?
Image via WikipediaNobody goes to jail. This is the mantra of the financial-crisis era, one that saw virtually every major bank and financial company on Wall Street embroiled in obscene criminal scandals that impoverished millions and collectively destroyed hundreds of billions, in fact, trillions of dollars of the world's wealth — and nobody went to jail. Nobody, that is, except Bernie Madoff, a flamboyant and pathological celebrity con artist, whose victims happened to be other rich and famous people.
Instead, federal regulators and prosecutors have let the banks and finance companies that tried to burn the world economy to the ground get off with carefully orchestrated settlements — whitewash jobs that involve the firms paying pathetically small fines without even being required to admit wrongdoing. To add insult to injury, the people who actually committed the crimes almost never pay the fines themselves; banks caught defrauding their shareholders often use shareholder money to foot the tab of justice.
US Economy Illustrated
The U.S. national debt is currently $14,081,561,324,681.83. It is more than 14 times larger than it was back in 1980. Unfortunately, the national debt continues to grow at breathtaking speed. In fact, the Obama administration is projecting that the federal budget deficit for this year will be an all-time record 1.6 trillion dollars.
As tens of thousands of U.S. factories get shut down and as millions of jobs get shipped overseas, the number of unemployed Americans continues to go up and up and up. As you can see from the chart below, there has been a long-term trend of increasing unemployment in the United States. In fact, there are about 3 and a half times as many unemployed workers in the United States today as there were when 1970 began. All of the major trends in global trade are very bad for the U.S. middle class. For example, the U.S. trade deficit with China for 2010 was 27 times larger than it was back in 1990.
The median duration of unemployment in the United States is in unprecedented territory. For most of the post-World War 2 era, when the median duration of unemployment in America reached 10 weeks that was considered a national crisis. Today competition for jobs is so intense that the median duration of unemployment is now well over 20 weeks....
A high price for oil is very, very bad for the U.S. economy. The entire economic system is based on being able to use massive quantities of very cheap oil. Unfortunately, that paradigm is starting to break down and the consequences will be very bitter. Back in mid-2008, the price of oil hit an all-time record of $147 a barrel and subsequently the world financial system imploded a few months later. The price of oil is on the march again and that is very bad news for the U.S. economy....
read more here
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