Resentment of the high salaries and benefits given to government employees in the US is a growing political issue.
Salaries for government workers, particularly employees of the federal government; have been rising while pay for the majority of Americans has remained flat or is falling. To make matters worse government workers often enjoy benefits that ordinary workers no longer have access to such as pensions, health insurance, vacation pay, union contracts and long breaks.
Top Spanish government official recently announced that it is drawing up a new structuring scheme that would put back into business its regional savings bank. Continue Reading
The United States could be facing a debt crisis similar to that which has gripped some European countries including Ireland and Portugal.
The big issue in the US is the 50 states each of which controls its own budget and sets its taxation under the constitution. Some states including California are now facing a fiscal crisis because of bloated budgets and falling tax revenues.
A large percentage of state revenues is generated by bonds sold on the market. It is now apparent that some states will not have enough money to pay off their debts. If that happens the states could become insolvent.
The big problem here is that there currently is no legal way for a state in the United States to declare bankruptcy which would enable a state government to restructure its debts. Local governments like counties and cities in the US have this option but states do not.
State governments could go to Congress for a bailout but it’s likely that Congress would refuse such a bailout. Public anger at the federal bailout of automakers General Motors and Chrysler led to the ouster of the Democratic majority in the House of Representatives that voted to approve it. Few American politicians would risk such a move at this time.
To add fuel to the fire, public employees unions which are a powerful political force in the US could oppose it. The unions fear that the Republican majority in Congress could use restructuring to rip up contracts that give their members high salaries and large pension benefits. Such a move would probably be very popular in America where anger at highly paid government workers is growing, particularly among unemployed private sector employees.
There are also Constitutional issues here that have to be explored. Any move by Congress to restructure a state’s finances could be seen as unconstitutional and will face court challenges. Many of the states facing default are controlled by the Democrats who fear that Republicans will use such powers to get rid of social and transportation programs.
With several large states like California and New York teetering on the brink of insolvency, a solution will have to be found. Expect President Obama, the banking community and Congressional Republican leaders to try and work out a compromise. Even such a compromise might not stand because it would have to be put to voters in popular referendums in some states, particularly California.
The fiscal crisis facing US states will probably drag on for several years with no real end in sight. The worst case scenario is that it could trigger an even bigger economic crisis in the US than the one in 2008.
A third of Estonian population disapprove a changeover of national currency from Kroon to Euro, a survey said.
Oppositors noted their apprehensions by saying that the country would become the poorest member of EU and it could possibly push the economy to use its own scarce resources in helping out other member countries of the union who failed to meet their own fiscal discipline. Continue Reading
The premier American bank recently expressed that it’s no longer processing payments course through them by supporters of the Australian whistle-blower Julian Assange, the founder of WikiLeaks, who’s been recently arrested in London and later released on order of London’s High Court.
The South Korean automaker giant, Kia and eBay have recently joined hands to set up an online shopping service. This partnership had included more than 345 Kia dealers in the United States alone, all of whom have joined the program.
The research firm, J.D. Power had said that the Internet auto shopping is up 17 percent so far this year 2010, and reported that 79 percent of all automobile shoppers use a third-party web site, surfing, before making any purchases.
Another auto giant, GM had briefly tried to forged a partnership with eBay last year, but they later abandoned it in favor of broader national marketing.
EBay’s share had risen 1 percent settling at 30.64, while GM’s share slid 0.5 percent to only 34.08.
The most important fallout from the Republican takeover of the US Congress could be major changes in US monetary policy.
Traditionally, American politicians have ignored monetary policy and left the issue up to the economists at the US central bank or Federal Reserve System. The economic downturn and the banking crisis that led to it seem to have changed all that.
The Fed faces growing skepticism of its traditional policy of pumping up the economy by increasing the money supply. In particular both American and foreign leaders have been very critical of a plan by Fed Chairman Ben Bernanke to buy up hundreds of millions of dollars worth of US treasury notes.
Although there has always been lots of criticism of the Federal Reserve from the far left and the far right it seems to be moving into the political mainstream. When the Republicans take over the lower house of Congress (House of Representatives) next year the most vocal critic of the Fed, Rep. Ron Paul of Texas will become Chairman of the Subcommittee on Domestic Monetary Policy.
This means that Paul will be able to conduct televised investigations of the Fed. He’ll also have the power to call Bernanke and other Fed officials to testify before Congress and subpoena the Fed’s records. One has to wonder if the paper shredder at the Fed is working overtime.
This could mean big trouble for Bernanke because Ron Paul has long called for the abolition of the Federal Reserve and the return of the US to the gold standard. Like many libertarians in the US, Paul believes that currencies based on precious on gold are more reliable than fiat currency like the current US dollar. The US went off the gold standard under Richard Nixon in the early 1970s.
The result of this could the monetary policy equivalent of the U.S. Senate’s Church Committee which investigated the CIA in the 1970s and radically changed US foreign policy. By laying bare the CIA’s secrets and questionable activities the Church Committee effectively destroyed the CIA’s reputation and undermined its power. Paul’s committee could do the same to the Federal Reserve System.
If the economy doesn’t improve soon and unemployment remains high the Fed could become a popular scapegoat for America’s problems. Hearings on the Fed could become a witch hunt designed to get the bankers held responsible for the nation’s problems.
Such an investigation could put President Obama in a real uncomfortable situation because he has been a strong supporter of Ben Bernanke and his policies. Although Paul is clearly on the right his crusade against the Fed has received strong support from left wing members of Congress including U.S. Senator Bernie Sanders of Vermont (the only socialist currently serving in the US Congress) and influential Democrats like Barney Frank of Massachusetts.
Obama might have to choose between economic policy and support from his left wing base (which will be critical if he wants to get reelected in 2012). If Obama dumps Bernanke this could effectively put Congress in charge of US monetary policy and destroy the Fed’s power. What this will mean will is hard to see but one thing is clear a return to the gold standard like Paul demands is unlikely.
Andy Warhol’s 7 foot painting of a glass Coca-Cola bottle has reportedly been sold for a whooping $35.4 million at the Sotheby’s in New York, Tuesday.
A day before that, Philips de Pury & Co., its chief auction house rival, has just sold a Warhol painting, dated 1962 for $63 million. The painting was a repeating grainy image of the iconic Elizabeth Taylor.
Andy Warhol’s Coca-Cola painting was also dated 1962. Elizabeth Richebourg Rea, who was the seller, curator and an artist herself, has acquired the piece for $143,000 at the Christie’s way back 1983.
The American International Group reportedly said that it will use the nearly $37 billion in money it made in recent days to pay back a large chunk of the debt it owes to the government.
Right now, the group is in the midst of repaying the biggest bailout the government doled out during the recent financial crisis.
The American International Group also said last Monday, that it closed the previously announced sale of American Life Insurance Co. It was reported that MetLife had purchased ALICO for $16.2 billion. The ALICO sale came just after AIG completed an initial public offering for AIA Group Ltd., wherein the offering raised a total sum of $20.51 billion. Unfornately, it was MetLife who bought the American Life Insurance Co.
CEO Douglas Miller of EXCO Resources, reportedly wants to buy the oil and gas producer’s outstanding shares in a deal said to be worth more than $4 billion.
It was said that he would be willing forked out $20.50 per share, a 38 percent premium over EXCO’s closing price on Friday.
The Company’s stock jumped to $4.44, nearly 30%, settling to $19.27 in late afternoon trading.
Their stock has been declining and that is enough to make the company an attractive takeover target for Miller and for other potential investors. But according to some experts, they had expected that Miller will also take the company private. And by doing so it would make it easier for him to idle projects that have struggled to post profits over the recent years.
The Labor Department had made a report, Friday, that the unemployement rates has significantly decreased in some 23 states and in Washington, D.C. However, in some states, it rose and 16 other states remained unchanged.
Florida and the state of California, the hardest-hit by the housing problem, still continue to be plagued with double-digit unemployment rates. at 14.4%, Nevada remained the state with the highest unemployment rate, and this figure is more than a point higher than Michigan’s which is 13%, the state of Michigan is recorded in second-place. Overall, 15 states had rates over 9.6% national figure and this was released early this month. The states which has the lowest rate in the country remained to be North and South Dakota with 3.7 percent and 4.4 percent respectively.
Despite reports that stated that there are improvement in the jobless rates, 34 states reported a decrease in the number of people being employed and the possibility of being hired, mainly, because there are fewer people who are hunted for jobs. Of the 50 states, Fourteen who have slipped are regarded as statistically significant. Only the states of New Mexico, New Hampshire and Washington, D.C., posted statistically significant upward trends in their employment from August of this year.
Despite rumors and concerns that the labor market have stagnated this summer, the 21 states garnered a higher or the same unemployment rates just this September as compared to the same states a year ago.
After four months of speculations, world’s number 2 biggest economy’s currency yuan, fell hard, hitting its lowest since 2007. Speculation on China’s interest rate and the need for currency gains to combat inflation seemed to be the main culprit.
The People’s Bank of China has set the daily reference rate at 0.3% weaker to 6.6754 a dollar, this the biggest decline since August 2010.This also reflects a rally in the US dollar.
The Group of 20 nations’s finance ministers are set to meet in Gyeongju, South Korea, this week before the countries’ leaders meet for talks next month Korea’s capital, Seoul. Their benchmark five-year bonds also fell because of this.
The reference rate was fixed weaker and Sean Callow said, “given what happened to the dollar overnight.” Callow is a senior currency strategist at Westpac Banking Corp. based in Sydney, Australia. He further reiterated that “Even though they may get trouble in G-20, it’s possible they may want to soften the appreciation’s blow to exporters.”
China Foreign Exchange Trade System said, “The yuan is down to 0.21 percent settling to 6.6585 from 6.6447 as of 9:54 a.m. in Shanghai.”
They added that it was the biggest drop since June 22. It however rosed to 2.5 percent since a two-year peg against the green bucks was scrapped on June 19.
In Hongkong, the twelve month non deliverable forwards also fell to 0.24% to a dollar, reflecting bets that the currency will still strengthen 3.2% in one years’s time. The Dollar Index which traded on ICE Futures in New York, USA, has also tracked the dollar against those of six trading partners jumping 1.7%, the most in two months time.