Economics

U.S. employers won’t hire enough workers this year to lower the jobless rate much below the level of 9.7 percent reached in February, three Obama administration economic officials said today.

The proportion of Americans who can’t find work is likely to “remain elevated for an extended period,” Treasury Secretary Timothy F. Geithner, White House budget director Peter Orszag and Christina Romer, chairman of the Council of Economic Advisers, said in a joint statement. The officials said unemployment may even rise “slightly” over the next few months as discouraged workers start job-hunting again.

“We do not expect further declines in unemployment this year,” the officials said in testimony prepared for the House Appropriations Committee. They predicted the economy would add about 100,000 jobs a month on average — not enough to bring the jobless rate down substantially.

Source/Full Story: Bloomberg.com

The number of Americans with little or no retirement savings increased for the third straight year, according to an annual survey released Tuesday.

Those who socked away less than $10,000 for their nest egg jumped to 43 percent this year, up from 39 percent in 2009, the Employee Benefit Research Institute’s 20th-annual Retirement Confidence Survey found. Among the respondents, 27 percent said they had less than $1,000, compared to 20 percent last year.

“Americans’ attitudes toward retirement have clearly tracked the economy the last couple of years, and that seems to be the case in 2010,” said Jack VanDerhei, research director for the Washington, D.C.-based institute and a co-author of the study.

retirement-confidence-survey.JPGView full sizeThose who have said they saved for retirement fell to 69 percent, from 75 percent last year. In addition, nearly one in four respondents said they have postponed their planned retirement age in the last 12 months, compared to 14 percent in 2008.

The national survey — billed as the most comprehensive of its kind — randomly polled 1,153 individuals aged 25 and older in January. The percentage of unemployed respondents was one in 10, more than double that of 2008.

VanDerhei attributed the findings to job insecurities, layoffs, stock market losses and a trend among many companies last year to freeze 401K contribution matches. However, suspending savings and postponing retirement are only temporary solutions, he said.

Source/Full Story: NJ.com

The recall of products containing a potentially salmonella-tainted flavoring ingredient ballooned this week with the addition of 1.7 million pounds of ready-to-eat beef taquito and chicken quesadilla products from a Houston firm.

Ruiz Foods of Denison, Texas, also recalled 115,700 pounds of Tornados Ranchero Beef & Cheese roll-ups.

All the recalled products contained hydrolyzed vegetable protein (HVP). That is an MSG-like flavor enhancer made by Basic Food Flavors of North Las Vegas, Nev., which on March 4 announced a recall of its entire production dating to Feb. 17, 2009. The company has declined to comment.

To date, 105 products containing the ingredient have been recalled, including bouillons, dip mixes, salad dressings, gravy mixes, snacks, soups and ready-to-eat foods. The Food and Drug Administration is continuously updating the recall list at www.foodsafety.gov.

Source/Full Story: USATODAY.com

The Greek economy is set to shrink by more than expected this year, the government said on Wednesday, as it braced for nationwide strikes protesting its plans for bringing the country’s budget deficit under control.

Greece, grappling with a ballooning deficit and a 300 billion euro (272 billion pound) debt pile, told the European Union that 2010 gross domestic product (GDP) would “most likely” shrink by more than the 0.3 percent currently forecast.

It also said the drop may exceed an alternative, more pessimistic, scenario published in Greece’s Stability and Growth Programme in January envisaging a 0.8 percent contraction.

Economists and ratings agencies have warned that a sharper than expected slowdown in the economy is one of the biggest threats to Greece’s commitment to cut its budget deficit to 2.8 percent of GDP by 2012 from close to 13 percent last year.

Source/Full Story: Reuters

China’s central bank chief laid the groundwork for an appreciation of the renminbi at the weekend when he described the current dollar peg as temporary, striking a more emollient tone after months of tough opposition in Beijing to a shift in exchange rate policy.

Zhou Xiaochuan, governor of the People’s Bank of China, gave the strongest hint yet from a senior official that China would abandon the unofficial dollar peg, in place since mid-2008. He said it was a “special” policy to weather the financial crisis.

“This is a part of our package of policies for dealing with the global financial crisis. Sooner or later, we will exit the policies.”

Mr Zhou’s comments contrasted with recent Chinese comments on its currency policy in the face of international criticism that the renminbi was undervalued. In December, premier Wen Jiabao said: “We will not yield to any pressure of any form forcing us to appreciate.” Chinese officials have repeatedly emphasised the need for a stable exchange rate.

Source/Full Story: FT.com

A revolution will erupt if billions of euro more in taxpayers’ money is handed over to Anglo Irish Bank, Enda Kenny has warned.

The Fine Gael leader said people can no longer tolerate massive public funding of the nationalised bank as it stands.

Expected record losses at the bank, to be announced later this month, have fuelled speculation it will seek another six billion euro from the Government, on top of the four billion it has already pumped in.

Mr Kenny told Taoiseach Brian Cowen there will be a popular uprising if any such request is given the go-ahead.

“There’ll be revolution on the streets if you do that,” he insisted.

“Whatever case can be made for Allied Irish Bank (AIB), there can be no case made for giving six billion euro more of taxpayers’ money to Anglo Irish Bank.

“This is effectively a dead bank which will not lend any further monies.”

Mr Kenny demanded Anglo be split into a “good bank” and “bad bank” – taking control of the toxic borrowings – before it is given any more help.

The Fine Gael leader also demanded AIB be handed preconditions if it requests further recapitalisation, after the lender went into the red for the first time in its history with pre-tax losses of 2.65 billion euro.

Mr Cowen said Anglo has already asked the European Commission for permission to break up into a “good bank” and “bad bank”, and insisted the Government remains ready to give more cash to banks in an effort to save them.

Source/Full Story: Independent.ie

Mr Dimon told investors at the Wall Street bank’s annual meeting that “there could be contagion” if a state the size of California, the biggest of the United States, had problems making debt repayments. “Greece itself would not be an issue for this company, nor would any other country,” said Mr Dimon. “We don’t really foresee the European Union coming apart.” The senior banker said that JP Morgan Chase and other US rivals are largely immune from the European debt crisis, as the risks have largely been hedged.

California however poses more of a risk, given the state’s $20bn (£13.1bn) budget deficit, which Governor Arnold Schwarzenegger is desperately trying to reduce.

Source/Full Story: Telegraph

The euro has become another “subprime” currency, afflicted by debts, funny bookkeeping, regulatory failure and widespread street protests in Greece and Spain. It’s ironic that more violence-prone Americans didn’t hit the streets, and throw rocks, when their living standards were sliced dramatically. Not yet anyway.

The euro began falling quickly after Greece hit the wall and it was discovered that the Euro’s central banker had not required independent audits to monitor the financial behaviour of the euro’s 16 user-nations. Its regulators took their finance ministers’ words for it. This lapse in oversight sounds similar to the Bush regime, which let its financial institutions and Wall Street cowboys run amok, all in the name of its libertarian religion.

Source/Full Story: nationalpost.com

Regulators shut down banks in Nevada and Washington on Friday, marking the 21st and 22nd failures this year of federally insured banks.

The Federal Deposit Insurance Corp. was appointed receiver of Carson River Community Bank, based in Carson City, Nev. and Rainier Pacific Bank in Tacoma, Wash.

Carson River Community Bank had $51.1 million in assets and $50 million in deposits as of Dec. 31. Rainier Pacific Bank had $717.8 million in assets and $446.2 million in deposits as of Dec. 31.

The FDIC said that Carson River’s deposits will be assumed by Reno, Nev.-based Heritage Bank of Nevada. Carson River’s lone branch will reopen Monday as an office of Heritage Bank.

Source/Full Story:   Yahoo! News

Notice how all the bad news is somehow unexpected.

Sales of previously owned houses unexpectedly slumped in January for the second consecutive month, raising fresh concerns about the housing market’s potential for rebound even as a new report showed that the economy expanded more than previously forecast at the end of last year.

Sales of existing houses, townhouses, condominiums and cooperatives fell 7.2 percent to a seasonally adjusted annual rate of 5.05 million in January from December, the National Association of Realtors reported Friday. Many analysts had expected a slight gain.

Source/Full Story:   washingtonpost.com

Dominique Strauss-Kahn, the head of the International Monetary Fund, suggested Friday the organization might one day be called on to provide countries with a global reserve currency that would serve as an alternative to the U.S. dollar.

"That day has not yet come, but I think it is intellectually healthy to explore these kinds of ideas now," he said in a speech on the future mandate of the 186-nation Washington-based lending organization.

Strauss-Kahn said such an asset could be similar to but distinctly different from the IMF’s special drawing rights, or SDRs, the accounting unit that countries use to hold funds within the IMF. It is based on a basket of major currencies.

He said having other alternatives to the dollar "would limit the extent to which the international monetary system as a whole depends on the policies and conditions of a single, albeit dominant, country."

Source/Full Story:   ABC News

Resales of U.S. homes and condos fell 7.2% in January to a seasonally adjusted annual rate of 5.05 million, the lowest in seven months, the National Association of Realtors reported Friday. Sales of existing homes have fallen two consecutive months after rising steadily through the fall on the back of a federal subsidy for first-time home buyers. “It’s not good news,” said Lawrence Yun, chief economist for the real estate industry lobbying group. “There is rising concern about the strength of the housing recovery.” Inventories of unsold homes fell 0.5% to 3.265 million, or 7.8 months of supply at the current sales pace.

Source/Full Story: MarketWatch

The US is heading for a debt-driven “financial meltdown” within five to seven years, according to Judd Gregg, the outgoing Republican senator for New Hampshire.

In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt.

“We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”

Source/Full Story:   FT.com

Tens of thousands of Greeks took to the streets Wednesday as much of the country went on a 24-hour strike against government austerity measures.

Protesters clash with riot police during a demonstration in Athens on Wednesday. Greece ground to a halt as unions staged a one-day general strike and thousands of demonstrators took to the streets to protest austerity measures designed to tame a public debt crisis.

A small group of youths threw Molotov cocktails at police, who responded with tear gas. However, the 20,000 people who filed through downtown Athens—a relatively large crowd for a Greek strike—mostly limited themselves to chanting anti-government slogans.

Public- and private-sector unions called the strike to protest a range of measures aimed at reducing Greece’s budget deficit. The government has announced a freeze on civil-service wages, cuts in public-sector entitlements and the closing of tax loopholes for certain professions, including some civil servants. It has also announced a fuel-tax increase.

“There is an all-out war against public servants, those who earn the least,” said Spyros Papaspyros president of ADEDY, an umbrella union for public-sector workers. “We will fight to keep the little we have. The government and the EU must understand the crisis must be paid by the rich.”

Source/Full Story: WSJ.com

The Federal Deposit Insurance Corporation is bracing for a new wave of bank failures that could cost the agency many billions of dollars and further strain its finances.

With bank failures running at their highest level in nearly two decades, the F.D.I.C. is racing to keep up with rising losses to its insurance fund, which safeguards savers’ deposits. On Tuesday, the agency announced that it had placed 702 lenders on its list of “problem” banks, the highest number since 1993.

Not all of those banks are destined to founder, and F.D.I.C. officials said Tuesday that they expected failures to peak this year. But they also warned that the fund might have to cover $20 billion in additional losses by 2013 — a bill that could be even greater if the economy worsens.

F.D.I.C. officials say the fund has ample resources to cope with its projected losses.

“We think that we have the cash we need,”

Sheila C. Bair, the F.D.I.C. chairwoman, said in an interview on Tuesday. She said it was unlikely the F.D.I.C. would need to tap its emergency credit line with the Treasury Department, although she did not rule out such an action.

Source/Full Story NYTimes.com