WSJ: It's the Euro you should be worried about :
“The boost given by the falling dollar to commodity prices squeezes the economy at the wrong time. It also risks stoking fears about inflation, potentially touching off a rally in Treasury yields.
The nearer-term problem, however, may be on the other side of the Atlantic. The euro is up almost 19% against the dollar since March, crimping European exporters and economic recovery.”
Bloomberg: China's 'Growth on Steroids' raises danger of renewed slowdown :
State-directed support will make up more than four-fifths of [China's] growth this year, says the World Bank. An exit from the stimulus won’t be easy without unnerving investors: A plunge in July loan growth sent the Shanghai Composite Index down more than 20 percent in August.
“The effect of stimulus spending will taper off starting in mid-2010; the overall impact will be less than half what it was this year, said Wang Tao, a UBS AG economist in Beijing”
“China may still have to get used to a lower average annual growth rate as reduced demand from Western nations slows exports. The World Bank estimates 2 percentage points may be shaved off the average 10 percent yearly growth recorded over the past decade, the ADB envisions a trajectory of 8 percent to 9 percent and Pettis says the economy may have to adjust to a trend growth rate of 5 percent to 7 percent.”
“The government has been postponing the difficult and painful reforms,” said Fernandez Lommen. “It’s a huge task ahead.”
Bloomberg: Wal-Mart, Wells Fargo trip stock market bulls
Wal-Mart warns of ‘tough’ holiday season: Wal-Mart suddenly looked a bit less invincible in the face of a recession during an investor conference presentation, according to this blog post. John Fleming, the discount retailer's chief merchandising officer, said the holiday shopping season “is going to be tough, it is going to be late.” The wallets of consumers “are challenged,” he said. Then Wal-Mart announced a new round of price cuts.
Bloomberg: Fed Beige Book Says Economy making ‘modest’ gains.
Commercial real estate is weakest sector in Fed's Beige Book. Weak or deteriorating commercial real estate markets were reported by all of the Federal Reserve's 12 district banks, according to the central bank's latest Beige Book. The Fed's regular anecdotal report found that the overall economy is still plagued by weakness in banking and increasing unemployment. Among the few bright spots in the report were observations of “stabilization or modest improvements” in manufacturing and housing
DP: we have too many strip malls and shopping plazas all over the world. We are going to need to literally demolish and recycle properties before the over-build, over-supply can be gradually corrected.
WSJ: Pay Czar to slash compensation at seven firms :
“The U.S. pay czar will cut in half the average compensation for 175 employees at firms receiving large sums of government aid, with the vast majority of salaries coming in under $500,000, according to people familiar with the government's plans…the biggest cut will be to salaries, which will drop by 90% on average. Kenneth Feinberg, the Treasury Department's special master for compensation, is expected to issue his determinations today.
Mr. Feinberg's ruling will provide fodder for the long-running debate about whether the Obama administration is being [tough] on Wall Street. An executive at one of the seven companies under Mr. Feinberg's authority said the terms came as a shock, especially because they changed so suddenly. The compensation restrictions “were clearly much worse than what had been anticipated.”
DP: Is Obama finally going to start walking some of his talk about financial firms and greedy, unconscionable behaviour? Big campaign contributions from the banks notwithstanding, my thought is Obama has to take a stand here or he will continue to lose all credibility with the majority of the American people who voted him in. Sticking with the bankers here means a high chance of being tossed out after one term.
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I do not trust the majority of politicians because most of them care little about doing the right thing and instead tend to do what is popular and will get them reelected.
Maybe I am an idealist for believing a true leader has to not only talk the talk but also walk the walk. So far the only people President Obama is walking with are the Big Bankers.
Paul Volcker has some interesting ideas on the big banks and the Federal Reserve but in a recent article he states he has very little influence in Washington. Funny how the people who created the crisis or did not see it coming are still have influence but someone like Volcker is largely ignored.
Like all things – Time has a way of sorting out who was wrong and who was right.
Obama won't take a stand as long as the Wall Street friendly Geithner and Summers are calling the shots.
At least they know how to put on a show – love the way they are grilling some banks over pay. On one hand a well publicized 'show' to sway public opinion, and on the other behind closed doors the banks get blank checks backed by the American people.
It could be worse though – could be a command economy like China who only has to produce goods in order to inflate its GDP!