Problem loans at China’s banks are significantly worse than initially thought, according to Moody’s Investors Service’s news release on July 4th. This raises concerns already expressed about China’s continued ability to grow its economy at annual rates approaching double-digits. The weakness is so pervasive that Moody’s “views the credit outlook for the Chinese banking system as potentially turning to negative. ” It added:
We assume that the majority of loans [by the banks] to local governments are of good quality, but based on our assessment of the loan classifications and risk characteristics, as provided by the NAO [China’s National Audit Office] and other Chinese agencies, we conclude that the banks’ exposure to local government borrowers is greater than we anticipated…
Constitutionally minded members of Congress, Senator Jim DeMint of South Carolina Senator Rand Paul of Kentucky and Representative Mike Lee of Utah, have introduced federal legislation that would exempt gold and silver coins issued by state governments as legal tender from federal taxation. This bill, called the Sound Money Protection Act, is intended to protect efforts by states to create a stable, inflation-free form of money. In particular, it would protect from federal gains taxation transaction between legal money in states which are species (e.g. gold or silver) and paper.
Utah has already passed a state law that recognizes these gold and silver coins as legal tender in Utah. A dozen other states, Senator DeMint’s South Carolina, are considering similar laws. Senator DeMint expressed the need from such state laws:
Eurogroup President Jean-Claude Juncker said in an interview over the weekend that the austerity measures being imposed on Greece in exchange for additional bail-out funding from the IMF will result in “the sovereignty of Greece [being] massively limited. ” He added, “One cannot be allowed to insult the Greeks. But one has to help them. They have said they are ready to accept expertise from the euro zone.”
Although the average Greek citizen has no interest whatsoever in such austerity measures being imposed on him by outsiders (recent polls show 80 percent opposed), the socialist-controlled parliament, headed by President George Papandreou of the Panhellenic Socialist Movement, has agreed to accept such intervention in order to obtain funds sufficient for the country to avoid default, at least for the time being. Those measures include higher taxes and much tighter enforcement of tax collection measures, as well as selling off major publicly owned properties in order to raise $8 billion by the end of the year.
Unwilling to be intimidated by the often-violent mass protests of radicals, Greek lawmakers passed yesterday the second and final austerity bill that was essential in order for the country to receive crucial bailout funds to prevent the government from defaulting by mid-July.
The second austerity measure passed the Greek Parliament by a vote of 155 to 136, just one day after the main austerity bill was approved. During the vote yesterday, rioters clashed with police just outside Parliament.
The June 20th report of the International Monetary Fund (IMF) to the United States strongly recommended that the debt ceiling be raised because “if the debt ceiling is not raised soon…[it] would have significant global repercussions, given the central role of U. S. Treasury bonds in world markets. ” In announcing the report, John Lipsky, acting managing director for the IMF, said:
We’re confident that the participants are well aware of the potential risks of a debt default in the U. S. and will avoid those dangers. It should be self-evident [that] a debt default by the U. S. government debt market would have very serious, far-reaching, dramatic repercussions and that’s why we’re confident that it will be avoided.
JBS CEO Art Thompson's topics this week: Two Banking Reg’s Make a Wrong; and Use of phony reaction to Iran — Iran is already an ally of Iraq, Afghanistan and Pakistan.
The economic projections released by the Federal Reserve on Wednesday estimated that in less than two years the unemployment rate would be down to 7 to 7 ½ percent, with the economy growing at an inflation-adjusted rate of nearly 4 percent. And in the next three to five years, the unemployment rate would likely be back to normal: between 5.2 and 5.6 percent.
This is wishful thinking. Okun’s Law (or rule of thumb) says that it’s going to take inflation-adjusted growth in the economy of at least 3 percent to make any dent at all in the unemployment rate. And even if GDP does grow at 4 percent, as the Fed projects, unemployment will likely drop by less than one half of one percent, or still well above 8 percent. Not only does that not bode well for President Obama’s reelection chances (no President since FDR has been elected to a second term when unemployment has been over 7.2 percent), it’s also bad news for those who continue their job search in a flat economy.
After witnessing the massive economic crisis swamping the European Union and euro-zone countries in particular, the Union of South American Nations (UNASUR or UNASUL) has slowed plans to create its own continental central bank and regional currency.
“When we started UNASUR the idea was to create a single central bank and a single currency, but the experiences of Europe led us to park the initiative,” explained Rafael Follonier, the Argentine representative to UNASUR. “In the European Union the single currency is a corset preventing members from leaving.”
Britain's leading financial newspaper, the London Financial Times, now believes that the U.S. economy may be headed toward a Japanese-style "Lost Decade."
On March 15, Congressman Ron Paul (R-Texas) introduced and sponsored bill H.R. 1094 — the Federal Reserve Board Abolition Act, which calls for the complete abolition of the Federal Reserve System and the Federal Reserve banks, and for the repeal of the Federal Reserve Act of 1913.