TODAY'S biggest news is the word that the European Central Bank is intervening in European debt markets in force, buying up Spanish- and Italian-government debt. The ECB spent last week expressing reluctance to take this step, but without it, the euro crisis threatened to spin irretrievably out of control. What are these purchases all about, and will they work?
WASHINGTON: The world's financial leaders see a number of threats facing a global economy still on an uneven road to recovery with US and European officials worrying that Greece will default on its debt. The finance ministers and central bank governors ended three days of meetings in Washington determined to work toward ``a more robust, balanced and job-rich economy'' while admitting there are risks in reaching that objective, the steering committee of the International Monetary Fund said in its communique Saturday.
Few statistics are more debated than unemployment numbers. The former head of the Bureau of Labor Statistics (BLS), the agency publishing unemployment numbers, estimates the figures are probably 3% too low. The unemployment numbers are based on people actively looking for work. The first figure shows the percentage of labor force participation. Each horizontal line on this chart represents 2 million people. Since the official start of the 2008 recession, 6 million fewer people are labor participants. Four million fewer participate since the recession officially ended in mid-2009.
The Cypriot parliament passed bailout measures today, but they are not quite the measures that Her Highness, Angela Merkel approves. They are not measures Cypriot citizens will approve of either.
Let's take a look at the present state of blackmail, as passed by Cyprus and reported by the BBC.
Despite the ECB's recent "stunning" rate cut, which sent the EUR modestly lower by a few hundred pips, the resultant resurge in the European currency has left the European Central Bank even more stunned: just what does it have to do to force its currency lower and boost Europe's peripheral economies, especially in a world in which every other major central banks is printing boatloads of money each and every month?
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Not much action in stocks or gold yesterday. Americans were busy at the polls… participating in the solemn fantasy of modern democratic government.
Since the beginning of the European debt crisis, most economists have focused on the potential consequences of a breakup of the euro zone. It’s easy to understand why. Although unlikely, a euro-zone breakup would be a potentially cataclysmic event that would leave the world economy in tatters. Economist Milton Friedman famously predicted the euro zone would fail when confronted with its first systemic crisis because it was a fair-weather construction.