Oh, ok…

Pope Benedict XVI has urged sense of responsibility from governments, employers and workers as they deal with job losses from the economic crisis.

The pontiff mentioned Fiat’s decision to stop auto production at a plant in Sicily, and Alcoa’s move to idle a smelter in Sardinia. Workers have protested these decisions.

Benedict said during his Angelus prayer Sunday that everything should be done to safeguard and increase employment levels, ensuring that workers have jobs that are both dignified and adequate to support their families.
Story continues below ↓advertisement | your ad here

The pope said the economic crisis and subsequent layoffs require “a great sense of responsibility from all: businessmen, workers, governing officials.”

Source/Full Story: msnbc.com

The Social Security Administration makes it official Thursday: There will be no cost of living increase for Social Security recipients next year, the first year without one since automatic adjustments were adopted in 1975.

The announcement comes as President Barack Obama and key members of Congress call for a second round of $250 payments to more than 50 million seniors, veterans, retired railroad workers and people with disabilities.

The payments would be equal to about a 2 percent increase for the average Social Security recipient. The cost: $13 billion.

Obama called on Congress Wednesday to approve the payments, and several key members of Congress said they would.

“This additional assistance will be especially important in the coming months, as countless seniors and others have seen their retirement accounts and home values decline as a result of this economic crisis,” Obama said in a statement.

Blame falling consumer prices for no automatic increase next year. By law, Social Security’s cost-of-living adjustment, or COLA, is pegged to inflation, which was negative this year, due largely to falling energy costs.

Source/Full Story: Yahoo! News
Technorati Tags: Social Security, COLA

Banks round the world have still to reveal about half of their likely losses resulting from the financial and economic crisis, the International Monetary Fund said on Wednesday, warning that there was still a “significant” risk of another downward lurch in the global recession.

The IMF described credit risks as remaining “elevated” even though financial conditions have improved significantly since spring.

It said these risks, alongside weakened banks, were likely to depress the availability of new credit and damp the global economic recovery unless significant additional capital was raised to improve the health and lending capability of banking systems.

In its twice-yearly Global Financial Stability Report, published on Wednesday in Istanbul, the IMF, estimated the ultimate losses in the financial system would total $3,400bn between 2007 and 2010, an improvement from the $4,000bn estimate it published in April.

Source/Full Story: FT.com
Technorati Tags: IMF, recession

The recession is supposedly bottoming out, but where is the upswing? The crisis is hitting southern Germany particularly hard as engineering companies and auto parts manufacturers lose orders at a faster pace than ever before. Ironically, their strength as exporters is the cause of their current troubles.

Karl Schlecht is standing on the roof terrace of his company headquarters, looking down at his life’s work. He moves carefully toward the railing. Schlecht is 77, his bones ache and his new hip is causing problems. But his ailments are minor when compared with the worries of Putzmeister, the company he founded 51 years ago in Aichtal, a town in Germany’s southwestern Swabia region.

“It makes my heart ache,” says Schlecht, as he stares out at an area devoid of human activity. There is no one to be seen on the factory grounds — no metal workers, no mechanics, no engineers. Most of the employees have been on short time since January, and the concrete pumps and mortar machines the company produces are beginning to accumulate throughout the plant — inventory for which there are no longer any buyers. In other words, dead capital.

Only last year, Arab and Asian buyers were clamoring for Schlecht’s products. Putzmeister had erected a separate building for making large pieces of equipment designed to convey concrete and mortar hundreds of meters into the sky on high-rise building construction sites in Dubai, Beijing and Shanghai. “It was like a beehive,” says Schlecht, referring to the amount of activity in the new building. But nothing is humming on those sites anymore.

Order volume has declined by more than half, and Putzmeister is already losing €5-10 million ($7-14 million) a month. Management consultants have analyzed the company’s operations and recommended sharp cutbacks. “Well,” says Schlecht, “we’ll have to cut the company in half.” And this at a time when others are already hoping for a turnaround in the economy?

Putzmeister, with its 3,600 employees, was until recently still being celebrated as one of those typical mid-sized, virtually unknown German companies that is a world leader in its niche market. Many of these companies are mechanical engineering companies and auto parts suppliers, produce first-class products, have exceptional expertise and export a large share of what they make. Putzmeister, for example, exports about 90 percent of its products.

Source/Full Story: SPIEGEL ONLINE

Right…..

The United States should be planning for a possible second round of fiscal stimulus to further prop up the economy after the $787 billion rescue package launched in February, an adviser to President Barack Obama said.

“We should be planning on a contingency basis for a second round of stimulus,” Laura D’Andrea Tyson, a member of the panel advising President Barack Obama on tackling the economic crisis. said on Tuesday.

Addressing a seminar in Singapore, Tyson said she felt the first round of stimulus aimed to prop up the economy had been slightly smaller than she would have liked and that a possible second round should be directed at infrastructure investment.

“The stimulus is performing close to expectations but not in timing,” Tyson said, referring to the slow pace at which the first round of stimulus had been spent on the economy.

Tyson, who is a dean of the Haas School of Business at University of California, Berkeley and was also a White House economic adviser to former President Bill Clinton, said an additional factor affecting the stimulus was that the economy was in a far worse shape than the administration had estimated.

INFLATION NOT A CONCERN

Tyson dispelled concerns about the ballooning U.S. fiscal deficit that is estimated to hit nearly 10 percent of gross domestic product, and its possible inflationary consequences.

“The Federal Reserve is not going to allow the U.S. to inflate away its debt,” she said.

Source/Full Story: Reuters

Rahm Emanuel was only giving voice to widespread political wisdom when he said that a crisis should never be “wasted.” Crises enable vastly accelerated political agendas and initiatives scarcely conceivable under calmer circumstances. So it goes now.

Here we stand more than a year into a grave economic crisis with a projected budget deficit of 13% of GDP. That’s more than twice the size of the next largest deficit since World War II. And this projected deficit is the culmination of a year when the federal government, at taxpayers’ expense, acquired enormous stakes in the banking, auto, mortgage, health-care and insurance industries.

With the crisis, the ill-conceived government reactions, and the ensuing economic downturn, the unfunded liabilities of federal programs — such as Social Security, civil-service and military pensions, the Pension Benefit Guarantee Corporation, Medicare and Medicaid — are over the $100 trillion mark. With U.S. GDP and federal tax receipts at about $14 trillion and $2.4 trillion respectively, such a debt all but guarantees higher interest rates, massive tax increases, and partial default on government promises.

But as bad as the fiscal picture is, panic-driven monetary policies portend to have even more dire consequences. We can expect rapidly rising prices and much, much higher interest rates over the next four or five years, and a concomitant deleterious impact on output and employment not unlike the late 1970s.

Source/Full Story: WSJ.com

World economic recovery will be slow and rising unemployment could bring the threat of social crisis and protectionism, World Bank President Robert Zoellick said in an interview with Spanish Sunday newspaper El Pais.

“What began as a great financial crisis and became a great economic crisis is now becoming a great crisis of unemployment, and if we don’t take measures there is a risk of a great human and social crisis, with major political implications,” he said.

“That’s a good breeding ground for populist, protectionist policies,” he added.

“The finance ministers of the G7 and the G20 are displaying a certain relief because the contraction has slowed. Although we could still have low or negative growth, the situation is less bad,” he said.

“But economists and industrialists are conscious that the recovery will be slow coming and weaker than expected.”

Source/Full Story:   World Bank

Scattered violence erupted in the early hours of the May Day holiday in Berlin and Hamburg that left dozens of police injured, authorities said on Friday.

Berlin police said 29 riot police were hurt and 12 people detained when about 200 protesters chanting anti-capitalism slogans threw bottles and stones at police after a street party ended in the eastern district of Friedrichshain.
…

In Hamburg, authorities said three riot police were injured in clashes with demonstrators.

Police in Berlin are bracing for further violence on Friday when members of far-right parties, labor unions and leftists march. The economic crisis, which has sent unemployment soaring and raised public ire over a growing disparity in wages, along with simmering anger over “gentrification” in some low-rent districts have raised police worries about this year’s May Day.

Source/Full Story::  Reuters

The Three Stooges

Source: CNN.com

Leaders attending the G-20 summit in London Thursday said they were confident they could bridge their differences to unite on a plan to help address the economic crisis.

There had been concerns that a rift was opening up between the approach being championed by the U.S. and Britain and that favored by France and Germany.

The U.S. and Britain want countries to agree to more economic stimulus ahead of new rules for the banking system.

France and Germany want the rules first — and tougher ones than initially suggested — and remain resistant to pumping more money into their economies.

However, European Commission President Jose Manuel Barroso said he was confident about the result of the summit.

“There is a great degree of convergence,” he told CNN Thursday morning.

British Business Secretary Peter Mandelson was less upbeat, telling CNN there were some “strains” among the delegates.

“I hope very much that they will be ironed out and we’ll come out with agreement at the end of the day.” Video Watch more on the G-20 summit »

The leaders say they want to find ways to stabilize financial markets throughout the world and pull the world out of a deepening recession.

They sat at the table Thursday for their first session with several targets in their sights, including tax havens and protectionism.

French Finance Minister Christine Lagarde called for a firm stand on tax havens.

Full Story

Read the full piece…

As the growing world-wide economic crisis deepens, military forces from Canada, the United States, and the United Kingdom are preparing to meet angry citizens on the street. The economic crisis – and the public outrage it is causing – is at the forefront of intelligence agencies and military forces in the western world.

Prominent trends forecaster Gerald Celente has been sounding the alarm for years, warning that riots and tax revolts are coming to America. The Pentagon, U. K. Ministry of Defense, and Canadian military apparently agree. In November of 2008 the United States Army War College released the report Known Unknowns: Unconventional “Strategic Shocks” in Defense Strategy Development. The report identifies economic collapse as a reason for the defense establishment to conduct domestic operations…

Source: oldthinkernews.com

Billionaire Warren Buffett, whose Berkshire Hathaway Inc. posted its worst results ever in 2008, said the economy “has fallen off a cliff” and that efforts to stimulate recovery may lead to inflation higher than the 1970s.

The American public is fearful, confused and changing their buying habits, which is showing up at Berkshire’s operating units, Buffett said during an appearance on the CNBC television network today. While the recession will end and future generations will live better than their parents, the economy “can’t turn around on a dime,” Buffett said, adding that some inflation is appropriate right now.

“We are doing things now that are potentially very inflationary,” he said. Buffett called on Congress to unite behind President Barack Obama, comparing the economic crisis to a military conflict that needs a commander-in-chief. “Patriotic Americans will realize this is a war,” he said.

Source: Bloomberg

In a bleaker assessment than those of most private forecasters, the World Bank predicted Sunday that the global economy would shrink in 2009 for the first time since World War II.

The bank did not provide a specific estimate, but bank officials said its economists would be publishing one in the next several weeks.

Until now, even extremely pessimistic forecasters have predicted that the global economy would eke out a tiny expansion but had warned that even a growth rate of 5 percent in China would be a disastrous slowdown, given the enormous pressure there to create jobs for the country’s rural population.

The World Bank also warned that global trade would contract for the first time since 1982, and that the decline would be the biggest since the 1930s.

In a report prepared for a meeting next week of finance ministers from the 20 industrialized and large developing countries, the World Bank said the economic crisis that started with junk mortgages in the United States was causing havoc for poorer countries around the world, not only stifling their growth but also choking off their access to credit as well.

The bank said the financial disruptions were all but certain to overwhelm the ability of institutions like it and the International Monetary Fund to provide a buffer.

Source:  International Herald Tribune

Source: FT.com

Global unemployment and poverty are set for a “dramatic increase” in the coming year as the world economic crisis deepens, according to a new report.

Projections by the International Labour Organization, a UN agency, on global employment trends predict that on a worst-case scenario, recorded unemployment could rise by more than 50m from baseline 2007 levels to 230m or 7.1 per cent of the world’s labour force by the end of 2009.

In the same scenario the number of people in “working poverty”, earning less than $2 a day, could rise to 1.4bn or 45 per cent of all workers, from 1.2bn in 2007.

This would leave as many people below the poverty line as there were in 1997, wiping out all the gains over the past decade and marking “a return to a situation in which more than half of the global labour force would be unemployed or counted as working poor.”

Juan Somavia, ILO director-general, said its message was “realistic, not alarmist”. “We are now facing a global jobs crisis…Progress in poverty reduction is unravelling and middle classes worldwide are weakening. The political and security implications are daunting.”

Full Story

Technorati Tags: unemployment , poverty

Source: Times Online

Japan’s economy — the second-largest in the world and a barometer of global consumer demand — was described yesterday as being “on a knife-edge” amid fears that it might plum- met into deflation within months.

The warnings, which come from senior private sector economists and from the Japanese Government, follow a Boxing Day release of dismal industrial, consumer and employment data.

Within hours of passing a record 88 trillion yen (£660 billion) budget, senior government sources told The Times that Japan would “inevitably” be forced to adopt new measures to halt the meltdown. The country’s spiraling economic crisis arises primarily from the sudden halt in American consumption and the acute slowdown in the flow of components and goods throughout Asia. The strong yen has savaged the competitiveness of Japanese goods such as cars and electronics at a critical moment.

A record-breaking fall in industrial output figures for November showed that the country’s huge manufacturing economy is collapsing far more rapidly and painfully than even the bleakest market forecasts believed possible. The 8.1 per cent month-on-month slide — a dramatic collapse from the 3.1 per cent decline logged in October, stunned many economists. Richard Jerram, of Macquarie Securities, said that the pace of collapse had almost gone beyond the point of sensible analysis.

Full Story

Technorati Tags: Japan, deflation

Source: breitbart.com

The governor of the Bank of Spain on Sunday issued a bleak assessment of the economic crisis, warning that the world faced a “total” financial meltdown unseen since the Great Depression.

“The lack of confidence is total,” Miguel Angel Fernandez Ordonez said in an interview with Spain’s El Pais daily.

“The inter-bank (lending) market is not functioning and this is generating vicious cycles: consumers are not consuming, businessmen are not taking on workers, investors are not investing and the banks are not lending.

“There is an almost total paralysis from which no-one is escaping,” he said, adding that any recovery — pencilled in by optimists for the end of 2009 and the start of 2010 — could be delayed if confidence is not restored.

Ordonez recognised that falling oil prices and lower taxes could kick-start a faster-than-anticipated recovery, but warned that a deepening cycle of falling consumer demand, rising unemployment and an ongoing lending squeeze could not be ruled out.

“This is the worst financial crisis since the Great Depression” of 1929, he added.

Ordonez said the European Central Bank, of which he is a governing council member, would cut interest rates in January if inflation expectations went much below two percent.

“If, among other variables, we observe that inflation expectations go much below two percent, it’s logical that we will lower rates.”

Regarding the dire situation in the United States, Ordonez said he backed the decision by the US Federal Reserve to cut interest rates almost to zero in the face of profound deflation fears.

Central banks are seeking to jumpstart movements on crucial interbank money markets that froze after the US market for high-risk, or subprime mortgages collapsed in mid 2007, and locked tighter after the US investment bank Lehman Brothers declared bankruptcy in mid September.

Interbank markets are a key link in the chain which provides credit to businesses and households.

Technorati Tags: Bank of Spain