Consumer Confidence Plummets in June – From the Conference Board: Consumer Confidence Index® Drops Sharply The Conference Board Consumer Confidence Index® which had been on the rise for three consecutive months, declined sharply in June. The Index now stands at 52.9 (1985=100), down from 62.7 in May. “Consumer confidence, which had posted three consecutive monthly gains and appeared to be gaining some traction, retreated sharply in June. Increasing uncertainty and apprehension about the future state of the economy and labor market, no doubt a result of the recent slowdown in job growth, are the primary reasons for the sharp reversal in confidence. Until the pace of job growth picks up, consumer confidence is not likely to pick up.” I rarely mention consumer confidence because it is mostly a coincident indicator, but this is quite a miss (expectations were for about the same level as May).
Ambrose Evans-Pritchard Unloads Both Barrels at the Fed – Ambrose Evans-Pritchard always has something interesting to say about economic policy. Some observers have called him sensational, but he often is spot on in his analysis of U.S. monetary policy. His latest piece doesn’t disappoint. It is a reply to Kartik Athreya’s now infamous essay that tells readers to ignore economic commentators on matters of monetary policy and only listen to the high priests of the Federal Reserve System. What is really great about this reply is that it summarizes many of my own views on the evolution of U.S. monetary policy over the last 10 years: monetary policy was too loose in the first half of the decade and has been effectively too tight in the latter half. It also does a good job highlighting how the Fed’s inordinate focus on stabilizing credit markets has come out the expense of stabilizing aggregate demand. Here is Evans-Pritchard: Dr Athreya’s assertions cannot be allowed to pass… Central banks were the ultimate authors of the credit crisis since it is they who set the price of credit too low, throwing the whole incentive structure of the capitalist system out of kilter, and more or less forcing banks to chase yield and engage in destructive behaviour.
State Ends Funds For Funerals Of Poor – Starting Thursday, Kansas will no longer help pay to bury people whose families can’t afford funeral expenses. That has counties, and funeral homes, worried that they will end up with the bill. Among other concerns, the group worried about what would happen when funeral homes pick up bodies only to realize that the family has no money to pay for services.
Obama on faux deficit hawks: ‘I’m calling their bluff’— President Obama says it’ll be put-up or shut-up time on cutting deficits soon enough. Obama said on Sunday that he would deliver serious deficit reduction proposals next year. And when he does, those politicians who talk tough on debt simply to score votes will have to show their hand, he said."When I start presenting some very difficult choices to the country, I hope some of these folks who are hollering about deficits and debt step up, because I’m calling their bluff," the president said at a press conference during the G-20 summit in Toronto.
Should States Cut College or Prison Spending? – Faced with a $19 billion budget deficit this spring, California Gov. Arnold Schwarzenegger announced that he was taking a cleaver to state health and welfare programs for the poor, the disabled, and the elderly. And rather than removing another slice from the state’s vaunted higher education system—which had already experienced years of reductions in state aid, ensuing tuition hikes, and student protests in response—budget cutters took more than $1 billion out of the state corrections programs, particularly prison health care.It may seem odd that state funding for college kids often competes with money for prisoners, but if you track spending in California over the past 30 years, you’ll see evidence of a long-standing tug of war between these two very different constituencies. Over much of the past decade, funding for corrections has gone steadily up, while spending on state colleges has tumbled. “The state seems to be saying we have more of a future in prisons than in universities,” University of California president Mark Yudof said in a recent speech.
Most Germans want to ditch the euro – A majority of Germans wants to scrap the euro and bring back the old currency, the deutschemark, according to a new poll published on Tuesday. The Ipsos survey showed 51 per cent of people in Europe’s top economy wanted their beloved deutschemark back, with 30 per cent wanting to keep the euro. The remainder was undecided. Older Germans were keener to return to the deutschemark, with 56 per cent of those over 50 years old saying they wanted the old money back in their pockets. In contrast, only 42 per cent of those between 16 and 29 shared this view.
BP Says Oil Spill Cleanup Operation May Be Delayed by Storm (Bloomberg) — BP Plc said its efforts to contain the largest oil spill in U.S. history in the Gulf of Mexico may be disrupted as Tropical Storm Alex strengthens. Alex, the first named system of this year’s Atlantic hurricane season, has already forced the evacuation of some offshore rigs in the Gulf. BP has been collecting gushing oil from the Macondo well through two systems feeding crude to the Discoverer Enterprise and the Q4000 drilling rig, with a capacity of as much as 28,000 barrels a day.BP needs about three more working days to connect a new cap that will carry crude from the leaking well to the Helix Producer, a vessel that can capture an additional 20,000 to 25,000 barrels a day, said Kent Wells, the company’s senior vice president. The work was to be completed by July 7, he said. “This is very precise work,” Wells said on a conference call yesterday. “A lot of it’s done on the surface and we require a flat sea state to do that work.”
IMF chief says would consider yuan for SDR basket (Reuters) – The head of the IMF said on Monday he would like to consider putting the Chinese yuan into the basket of currencies that make up the Fund’s Special Drawing Rights "the sooner the better", but its value first needed to be freely determined by the market.Dominique Strauss-Kahn told reporters in a news conference that he believed there would be more pressure to include yuan, also known as the renminbi, among SDR currencies as China’s economic clout grows. "This question has to be considered. I think it will be difficult to include the renminbi before the renminbi really has a market price and is in one way or the other a floating currency. But but the sooner, the better," he said.
Government Agencies Hold 46% of REO Inventory…and More Is Coming – As the GSEs and other federal agencies involved in housing finance sell their collective inventory of repossessed homes, they will generate significant pressure on prices, according to a new report from the real estate analytics firm Radar Logic. And with an even larger share of government-backed loans in the delinquency pipeline, their influence over home prices could last for years, the New York-based company says. Based on Radar Logic’s analysis, the federal government’s REO inventory — including homes owned by Fannie Mae, Freddie Mac, HUD, and the Department of Veterans Affairs (VA) — has increased steadily for over 24 months and now accounts for approximately 46 percent of the nation’s total REO supply
Spanish Banks Rage At End Of ECB Offer – Spanish banks have been lobbying the European Central Bank to act to ease the systemic fallout from the expiry of a €442bn ($542bn) funding programme this week, accusing the central bank of “absurd” behaviour in not renewing the scheme. On Thursday, the clock runs out on the ECB financing programme – the largest amount ever lent in a single liquidity operation by the central bank – under the terms of the one-year special liquidity facility launched last summer. One senior bank executive said: “Any central bank has to have the obligation to supply liquidity. But this is not the policy of the ECB. We are fighting them every day on this. It’s absurd.”Banks across the eurozone, but in Spain in particular, have found it hard in recent weeks to secure liquid funding in the commercial markets, with inter-bank funding virtually non-existent.
Gulf Coast Beach Clean-Up Crew Hiring Remains Murky As Oil Keeps Washing Ashore – "When the oil hit last week, people were walking up and down the beach in tears," Dauphin Island, a fish-shaped sliver of land at the southwest end of Mobile Bay, is home to about 1,300 permanent residents, vacation homes, and the businesses that cater to them. The day I’m there, many of the shops and restaurants are closed. Oil began washing ashore here in early May. There’s no boom along the water line and little visual evidence of oil now except small tar balls. BP has a claims office here, and Catholic Charities is offering qualifying residents emergency gas and electricity assistance. "They’re here waiting for oil," Most of the clean-up crew is resting under a tent shelter. When I ask what they’ve been doing today, they say "no comment," and "we can’t talk to you." But the men in the nearby beach buggy who are supervising tell me they work for Clean Harbors – an "environmental, energy, and industrial services" company based in Norwell, MA.
NJ Assembly, Senate Pass $29.4B Budget – New Jersey’s Democratic-controlled Legislature has approved a $29.4 billion budget, sending back to the Republican governor a spending plan that cuts hundreds of millions of dollars in public school aid, suspends property tax rebates and adds levies on businesses, students, the elderly and the disabled. The budget, approved by the Assembly early Tuesday morning and by the Senate hours earlier, is close to the one Gov. Chris Christie introduced in March amid some blunt talk about the state’s bleak finances. He said New Jersey was facing an $11 billion deficit and needed to cure its addiction to spending.
The Unemployment Insurance Crisis – An overlooked fiscal crisis looms: the depletion of the trust funds out of which states pay unemployment benefits. As of June 24, unemployment insurance (UI) trust funds in 30 states and the Virgin Islands were insolvent, requiring loans from the federal government totaling over $38 billion. The Department of Labor expects that as many as 40 states will require federal loans in fiscal 2013, with borrowing totaling $93 billion. This amount is above and beyond the $130 billion in additional federal spending on unemployment benefits in the current economic cycle.To put these amounts in context, the federal government will loan more to the states than the stimulus bill provided for Medicaid. From a different angle, the $93 billion in projected loans is less than the rescue package that European nations and the International Monetary Fund provided to Greece ($146 billion), but federal spending to extend UI benefits since July 2008 has already exceeded $131 billion, and the net federal spending in this area far exceeds the Greek bailout
States struggle to pass budgets without stimulus – For at least 30 cash-strapped states counting on federal stimulus money, the news was a stunning blow: A deficit-weary Congress had rejected billions in additional aid, forcing lawmakers into a mad scramble to balance their budgets. Now, with a new fiscal year just days away in most states, many governors are proposing to make up for the shortfall with tax increases, cuts in essential services and potential layoffs of thousands of public employees. "I support restraining federal spending, but cutting the only funding designed to help states maintain the very safety-net programs Congress mandates us to preserve will have devastating consequences," California Gov. Arnold Schwarzenegger said in a letter to his state’s congressional delegation.
BP Discussing a Backup Strategy to Contain Oil – Since shortly after oil began spewing into the Gulf of Mexico two months ago, relief wells have been discussed as the ultimate solution, their success in permanently plugging the runaway well deemed a foregone conclusion. But BP and government officials are now talking about a long-term containment plan to pump the oil to an existing platform should the relief well effort fail. While such a failure is considered highly unlikely, the contingency plan is the latest sign that with this most vexing of engineering challenges — snuffing a gusher 5,000 feet down in the gulf — nothing is a sure thing. Experts said it was conceivable that the “kill” procedure would not be effective, particularly if only a single relief well was used and the bottom of the well bore was damaged in the initial blowout. Pumping large quantities of erosive mud into the well could even end up damaging the well further, hindering later efforts to seal it.
Why We Are Totally Finished – In A Nutshell: Corporatocracy Has Replaced Capitalism Capitalism Fixes Problems & Preserves Democracy: Capitalism is what we should be relying on to fix our problems. Capitalism has it’s own ecosystem, just like biology’s ecosystem. An economic ecosystem that weeds out the weak, has parasites that eat the failures and new bacteria that evolves and grows replacements for that which failed. A system that keeps everything in balance. The problem is we are no longer a capitalistic society. What we were taught in school is now utter and absolute nonsense. Capitalism is a thing of the past. As outlined in "It’s Not A Financial Crisis – It’s A Stupidity Crisis", we created two back to back bubbles. The air out of the Tech Bubble was sucked up for fuel by our next stupidity crisis: The Housing Bubble. Now, after the second Stupidity Crisis there isn’t a third bubble to inflate.
Poor, off-the-cuff Attempt — I would suggest everyone read this Piece, though I don’t agree with it at all. The Solution to economic recovery lies not in flooding the Markets with Cash, but with actually putting people back to Work. I get static all the time for the simple demand that Someone provide a coherent outline for economic recovery. No one wants to put their Name and Reputation on the line with a definite list of objectives. The hidden rationale behind this lack of effort consists of a lack of belief by everyone that anything will make any economic difference. At this conjuncture I perceive that I must take the first Step, and be laughed at; the trick here being that economists must come up with alternate options to criticize myself. So here goes: 1) Let all Tax Cuts expire–go back to the Tax Codes of the mid-1990s….