On Wednesday the European Commission will present a giant stimulus package to meet the looming economic downturn -- with an estimated €130 billion in initiatives. But Brussels has neither the money nor the ability to forge an economic program. The situation is getting serious. Europe's industries are running out of contracts. Economists predict that next year will bring reduced working hours and layoffs and that times will get bleak. The US Federal Reserve and Treasury Department on Tuesday announced a new package totalling $800 billion to make it easier for small businesses, students and home buyers to borrow money. And in Europe, state economic stabilization policies that fell out of favor long ago have suddenly found many new backers. European commission President Jose Manuel Barroso On the European Commission, where European President José Manuel Barroso and 26 other commissioners direct the business of the European Union and where "the market" has been viewed as the best force to steer the economy for a long time, "the state" was supposed to keep its fingers out of everything. Now it's all different. The states -- or, more precisely, their taxpayers -- have just been forced to rescue the global banking system because its leaders proved to be little more than incompetent gamblers. Now more tax revenues are supposed to avert -- or cushion -- a threatening crisis in the global economy. Taking their places at the head of this phalanx in the fight of "politics against recession" are Barroso and his commissioners. They plan to bring forward an enormous economic program on Wednesday full of prescription for battling the crisis. "Temporary cuts in value-added (or sales) tax" is one of the proposals that could be "quickly implemented to give a strong fiscal impulse to promote consumption," reads one of the proposals. Additional caps should also be placed on the value-added taxes for certain labor-intensive services, like those performed by tradesmen, cooks or waiters. The Commission also intends to give tax concessions to especially climate-friendly products and to lower income taxes on low-income earners.
On Wednesday the European Commission will present a giant stimulus package to meet the looming economic downturn -- with an estimated €130 billion in initiatives. But Brussels has neither the money nor the ability to forge an economic program.
The situation is getting serious. Europe's industries are running out of contracts. Economists predict that next year will bring reduced working hours and layoffs and that times will get bleak. The US Federal Reserve and Treasury Department on Tuesday announced a new package totalling $800 billion to make it easier for small businesses, students and home buyers to borrow money. And in Europe, state economic stabilization policies that fell out of favor long ago have suddenly found many new backers.
European commission President Jose Manuel Barroso On the European Commission, where European President José Manuel Barroso and 26 other commissioners direct the business of the European Union and where "the market" has been viewed as the best force to steer the economy for a long time, "the state" was supposed to keep its fingers out of everything. Now it's all different.
The states -- or, more precisely, their taxpayers -- have just been forced to rescue the global banking system because its leaders proved to be little more than incompetent gamblers. Now more tax revenues are supposed to avert -- or cushion -- a threatening crisis in the global economy. Taking their places at the head of this phalanx in the fight of "politics against recession" are Barroso and his commissioners. They plan to bring forward an enormous economic program on Wednesday full of prescription for battling the crisis.
"Temporary cuts in value-added (or sales) tax" is one of the proposals that could be "quickly implemented to give a strong fiscal impulse to promote consumption," reads one of the proposals. Additional caps should also be placed on the value-added taxes for certain labor-intensive services, like those performed by tradesmen, cooks or waiters. The Commission also intends to give tax concessions to especially climate-friendly products and to lower income taxes on low-income earners.
Plans for a £160bn economic recovery package were unveiled by the European Commission today. The proposals - equivalent to 1.5 per cent of the combined wealth of the 27 EU countries - is not meant to be a "one-size-fits-all" strategy to tackle the financial crisis, insisted Commission President Jose Manuel Barroso. Instead Brussels wants EU governments to step up coordination of their national efforts to counter the downturn. Mr Barroso said national plans unveiled so far - including UK Prime Minister Gordon Brown's VAT-cutting package this week - were in line with the recovery goals set out at a "G20" crisis meeting in Washington earlier this month, and would be considered as a contribution to the EU-wide effort being called for today.
Plans for a £160bn economic recovery package were unveiled by the European Commission today.
The proposals - equivalent to 1.5 per cent of the combined wealth of the 27 EU countries - is not meant to be a "one-size-fits-all" strategy to tackle the financial crisis, insisted Commission President Jose Manuel Barroso.
Instead Brussels wants EU governments to step up coordination of their national efforts to counter the downturn.
Mr Barroso said national plans unveiled so far - including UK Prime Minister Gordon Brown's VAT-cutting package this week - were in line with the recovery goals set out at a "G20" crisis meeting in Washington earlier this month, and would be considered as a contribution to the EU-wide effort being called for today.
The European Commission has called for an EU-wide stimulus package worth €200 billion, the equivalent of 1.5 percent of the bloc's GDP. Brussels has even pledged to be flexible on member states increasing their budget deficit. The European Union Commission has approved a huge stimulus package aimed at reviving the bloc's struggling economies. The €200 billion ($260 billion) plan will represent 1.5 percent of the EU gross domestic product (GDP), with around €170 billion coming from national governments and the rest from EU funds and the European Investment Bank.
The European Commission has called for an EU-wide stimulus package worth €200 billion, the equivalent of 1.5 percent of the bloc's GDP. Brussels has even pledged to be flexible on member states increasing their budget deficit.
The European Union Commission has approved a huge stimulus package aimed at reviving the bloc's struggling economies. The €200 billion ($260 billion) plan will represent 1.5 percent of the EU gross domestic product (GDP), with around €170 billion coming from national governments and the rest from EU funds and the European Investment Bank.
BRUSSELS: The European Commission on Wednesday proposed measures totaling €200 billion, or $260 billion, to revive the region's flagging economy. The commission, the executive arm of the European Union, said in Brussels that the measures were necessary to bolster growth and employment in the EU's 27 member countries. Just Tuesday, the Organization for Economic Cooperation and Development predicted that the 15 countries of the euro zone would contract next year by a combined 0.6 percent, and economists have begun speaking of 2009 as a "lost year." The stimulus plan was larger than many economists had expected. It calls for spending of "around €200 billion" or 1.5 percent of EU gross domestic product. The vast majority - about €170 billion - would come from member-government spending, much of which has already been announced. The remaining €30 billion is to come from the budgets of the EU itself and the European Investment Bank. "Exceptional times call for exceptional measures," José Manuel Barroso, the commission president, said at a press conference in Brussels. "The jobs and well-being of our citizens are at stake. Europe needs to extend to the real economy its unprecedented coordination over financial markets. This recovery plan is big and bold, yet strategic and sustainable."
BRUSSELS: The European Commission on Wednesday proposed measures totaling €200 billion, or $260 billion, to revive the region's flagging economy.
The commission, the executive arm of the European Union, said in Brussels that the measures were necessary to bolster growth and employment in the EU's 27 member countries. Just Tuesday, the Organization for Economic Cooperation and Development predicted that the 15 countries of the euro zone would contract next year by a combined 0.6 percent, and economists have begun speaking of 2009 as a "lost year."
The stimulus plan was larger than many economists had expected. It calls for spending of "around €200 billion" or 1.5 percent of EU gross domestic product. The vast majority - about €170 billion - would come from member-government spending, much of which has already been announced. The remaining €30 billion is to come from the budgets of the EU itself and the European Investment Bank.
"Exceptional times call for exceptional measures," José Manuel Barroso, the commission president, said at a press conference in Brussels. "The jobs and well-being of our citizens are at stake. Europe needs to extend to the real economy its unprecedented coordination over financial markets. This recovery plan is big and bold, yet strategic and sustainable."
The European Commission is to allow member states to reduce their value added tax (VAT) rates to boost consumption during the recession, officials in Brussels said Tuesday, Nov 25. The European Union's executive arm will also propose increasing investments in infrastructure and in key sectors such as cars, construction and green technologies as part of its economic stimulus package, due to be unveiled on Wednesday. "Tomorrow we propose a coordinated EU fiscal stimulus, we will offer guidance to member states on the kind of measures to adopt," said Economic and Monetary Affairs Commissioner Joaquin Almunia Tuesday in a speech in Brussels. Officials told the DPA news agency this means giving governments a free hand in reducing their VAT rates -- but only as long as these cuts are temporary and that the standard rate is kept above the bloc's minimum level of 15 percent. Current VAT rates on goods and services vary from 25 percent in Sweden and Denmark to 15 percent in Cyprus and Luxembourg. Member states can also apply reduced rates on certain products.
The European Union's executive arm will also propose increasing investments in infrastructure and in key sectors such as cars, construction and green technologies as part of its economic stimulus package, due to be unveiled on Wednesday.
"Tomorrow we propose a coordinated EU fiscal stimulus, we will offer guidance to member states on the kind of measures to adopt," said Economic and Monetary Affairs Commissioner Joaquin Almunia Tuesday in a speech in Brussels.
Officials told the DPA news agency this means giving governments a free hand in reducing their VAT rates -- but only as long as these cuts are temporary and that the standard rate is kept above the bloc's minimum level of 15 percent.
Current VAT rates on goods and services vary from 25 percent in Sweden and Denmark to 15 percent in Cyprus and Luxembourg. Member states can also apply reduced rates on certain products.
The global recession has thrown the world's shipping industry into a slow-motion collapse. The cost of shipping has plummeted. As Somali pirates hold captive the Sirius Star, a Saudi ship with almost $100 million (€77.1 million) in oil on board, and Indian, British, Russian, and German ships battle pirates up and down the Gulf of Aden, one might imagine that the battle against piracy is the largest crisis faced by the merchant navy industry. Shipping is caught in a nasty downturn. After all, since January of this year, some 580 crew members have been held hostage, according to data collected by the International Maritime Bureau, and many millions of dollars have been paid in ransom. Insurance rates are up, ships are trying to avoid the Suez Canal (which ships get to via the Gulf of Aden, along the coastlines of Somalia and Yemen), and crews from India to Britain are refusing to board ships that pass through that zone. "This sort of thing can't be shut down immediately," says an aide to Indian President Pratibha Patil, who advises her on naval affairs. India's navy has fought at least three different pirate groups in the last week. "To some extent, the world's navies have to flex their muscles, and that takes time." But what's missing in the news reports about the modern-day pirates and the political repercussions is a simpler fact: The world's shipping industry is already on its knees and has spent the past six months in a slow-motion collapse kicked off by the . And the pirates, it would seem, are the least of the problem. Just six months ago, despite the fact that the economy in the US was already slowing down, the industry was steaming ahead. As ships of every flag, color, and size were crossing oceans, carrying in their often cavernous cargo bays the essentials of trade -- oil, steel, cement, iron ore, and coal -- shipping rates worldwide in June hit their highest peak ever. It cost nearly $234,000 a day to rent one of those large capesize vessels, the ones so big that they don't even fit through the Suez Canal.
The global recession has thrown the world's shipping industry into a slow-motion collapse. The cost of shipping has plummeted.
As Somali pirates hold captive the Sirius Star, a Saudi ship with almost $100 million (€77.1 million) in oil on board, and Indian, British, Russian, and German ships battle pirates up and down the Gulf of Aden, one might imagine that the battle against piracy is the largest crisis faced by the merchant navy industry.
Shipping is caught in a nasty downturn. After all, since January of this year, some 580 crew members have been held hostage, according to data collected by the International Maritime Bureau, and many millions of dollars have been paid in ransom. Insurance rates are up, ships are trying to avoid the Suez Canal (which ships get to via the Gulf of Aden, along the coastlines of Somalia and Yemen), and crews from India to Britain are refusing to board ships that pass through that zone. "This sort of thing can't be shut down immediately," says an aide to Indian President Pratibha Patil, who advises her on naval affairs. India's navy has fought at least three different pirate groups in the last week. "To some extent, the world's navies have to flex their muscles, and that takes time."
But what's missing in the news reports about the modern-day pirates and the political repercussions is a simpler fact: The world's shipping industry is already on its knees and has spent the past six months in a slow-motion collapse kicked off by the . And the pirates, it would seem, are the least of the problem. Just six months ago, despite the fact that the economy in the US was already slowing down, the industry was steaming ahead. As ships of every flag, color, and size were crossing oceans, carrying in their often cavernous cargo bays the essentials of trade -- oil, steel, cement, iron ore, and coal -- shipping rates worldwide in June hit their highest peak ever. It cost nearly $234,000 a day to rent one of those large capesize vessels, the ones so big that they don't even fit through the Suez Canal.
Container Crisis: Shipping Threatened by More than Just Pirates - SPIEGEL ONLINE
Letters of credit are the second part of the equation. Before shippers can put commodities on a boat, they like to get letters of credit from the eventual purchaser -- a bank guarantee that their client is capable of paying when the cargo arrives. But since the credit crisis has tightened, manufacturers are having more and more trouble getting letters of credit. "With the credit crisis causing banks to shy away from lending to one another for much longer than overnight, there have been reports of banks refusing to honor letters of credit from other banks," said Matt Robinson, an Australia-based analyst for Moody's, in a report issued on Oct. 23.Nearly 90 percent of the world's shipments rely on letters of credit, according to the World Trade Organization. While the drop in the availability of letters of credit is still largely anecdotal -- there is no centralized data available -- reports of shipments being stranded are doing the rounds of transportation companies. Galbraith's, the London shipbroker, said in a news release in late October that "stories [are] coming from all parts of the globe referring to early redeliveries, withdrawal by buyers from ship purchase agreements, bankruptcy of numerous steel traders, credit facilities being closed without notice to companies with previously unblemished records."
Nearly 90 percent of the world's shipments rely on letters of credit, according to the World Trade Organization. While the drop in the availability of letters of credit is still largely anecdotal -- there is no centralized data available -- reports of shipments being stranded are doing the rounds of transportation companies. Galbraith's, the London shipbroker, said in a news release in late October that "stories [are] coming from all parts of the globe referring to early redeliveries, withdrawal by buyers from ship purchase agreements, bankruptcy of numerous steel traders, credit facilities being closed without notice to companies with previously unblemished records."
See also this comment on DKos
I'm an exporter located in Portland. We specialize in Ag exports, from Washington state to Asia and the Middle East. Mostly apples and wine to Europe. These past 2 months, I've noticed something dramatic going on. the suppliers suddenly started calling me. This alone was a big change. Normally, I have to call THEM, beg, grovel, work like crazy to secure supplies. It was always a struggle because we had the overseas buyers, but the supply was tough. Now it's a 180 degree switch. They are calling me, asking about my buyers. Prices have started coming down, dramatically. I'm really worried because my suppliers in Washington have lots of expenses; cold storage costs, labour costs and so on. Shipping companies. It's always been same as (1) above. We had to scratch and scrape to get our reefer containers. Just last week, someone called from Maersk (!!!) and asked what was happening (!!). Shipping costs have now dropped to about half of what they were last year. It's becoming impossible for me to give quotes because they are changing every day. (2a) Just as I was writing this post, I got an email from another shipping company. They are wondering can we please sign this shipping contract? I believe the reason for this is the issue of credit. The buyers are still there. They still want to buy (we've got absolutely awesome product). The problem is, the shipping company can't count on the Letter of Credit from the foreign bank in order to pay for the shipping costs. If this continues for another 1 to 2 months, expect major companies in Washington to fold. This is a weird price deflation, not based on lack of demand but of logistics.
These past 2 months, I've noticed something dramatic going on.
(2a) Just as I was writing this post, I got an email from another shipping company. They are wondering can we please sign this shipping contract?
If this continues for another 1 to 2 months, expect major companies in Washington to fold. This is a weird price deflation, not based on lack of demand but of logistics.
and this:
http://www.moonofalabama.org/2008/11/world-trade-col.html#comments
German Chancellor Angela Merkel defended her economic policies as the German parliament, the Bundestag, continues to debate the country's 2009 budget. She said enough aid is there, but it's not being used. The second day of the Bundestag's budget debates centered on a speech by Angela Merkel, who laid out the principles behind the budget and admitted that the immediate economic and financial outlook was gloomy. "2009 will be year of bad news," Merkel said. "That's why we're building a bridge so that things will get better by 2010 at the latest." She also responded to criticism that the budget proposed by the governing Conservative-Social Democratic grand coalition does little to stimulate the economy, compared with plans envisioned by other nations such as the US and Britain.
The second day of the Bundestag's budget debates centered on a speech by Angela Merkel, who laid out the principles behind the budget and admitted that the immediate economic and financial outlook was gloomy.
"2009 will be year of bad news," Merkel said. "That's why we're building a bridge so that things will get better by 2010 at the latest."
She also responded to criticism that the budget proposed by the governing Conservative-Social Democratic grand coalition does little to stimulate the economy, compared with plans envisioned by other nations such as the US and Britain.
CHICAGO (Reuters) - Barack Obama will name former Federal Reserve Chairman Paul Volcker to chair a panel to advise the U.S. president-elect on stabilizing financial markets and averting a painful recession, transition officials said on Wednesday. The move is another step toward tackling the problems ailing the U.S. economy and is part of an aggressive effort by Obama to demonstrate that his administration will face the global financial crisis head-on when he takes over on January 20. Obama's transition team said he would make an "economic announcement" at 10:45 a.m. EST at his third news conference of the week, following a similar event on Tuesday, when he presented his picks to head the White House budget office. Transition officials said Obama policy adviser Austan Goolsbee, a University of Chicago economist, would be the panel's staff director.
CHICAGO (Reuters) - Barack Obama will name former Federal Reserve Chairman Paul Volcker to chair a panel to advise the U.S. president-elect on stabilizing financial markets and averting a painful recession, transition officials said on Wednesday.
The move is another step toward tackling the problems ailing the U.S. economy and is part of an aggressive effort by Obama to demonstrate that his administration will face the global financial crisis head-on when he takes over on January 20.
Obama's transition team said he would make an "economic announcement" at 10:45 a.m. EST at his third news conference of the week, following a similar event on Tuesday, when he presented his picks to head the White House budget office.
Transition officials said Obama policy adviser Austan Goolsbee, a University of Chicago economist, would be the panel's staff director.
Northern Rock, the state-owned lender, has embarrassed the Government by increasing rates on its most competitive deals despite calls for high street lenders to pass on cuts in borrowing costs. This morning, the bank, which was nationalised in February, increased interest rates on its fixed-rate deals by up to 0.3 percentage points, adding up to £40 a month to the cost of monthly interest-only repayments on a £150,000 loan. Its most competitive one-year fixed mortgage has jumped from 3.99 per cent to 4.19 per cent. In the last week, the Government and the Bank of England have warned banks it is vital for the economy that they boost lending and reduce interest rates in line with the falling base rate.
Northern Rock, the state-owned lender, has embarrassed the Government by increasing rates on its most competitive deals despite calls for high street lenders to pass on cuts in borrowing costs.
This morning, the bank, which was nationalised in February, increased interest rates on its fixed-rate deals by up to 0.3 percentage points, adding up to £40 a month to the cost of monthly interest-only repayments on a £150,000 loan.
Its most competitive one-year fixed mortgage has jumped from 3.99 per cent to 4.19 per cent.
In the last week, the Government and the Bank of England have warned banks it is vital for the economy that they boost lending and reduce interest rates in line with the falling base rate.
Luxury German carmaker Porsche says it is postponing moves to boost its stake in Volkswagen amidst signs the auto industry is facing tough times. But the delay doesn't mean Porsche's plans have been put on hold. At a news conference on Wednesday, Nov. 26, Porsche boss Wendelin Wiedeking said that the company would not reach its goal of acquiring a majority stake in VW this year, but that a future takeover was still on the cards. "We're sticking to our plan of acquiring 50 percent [of VW shares] and trying to get 75 percent," Wiedeking said. "But with prices so high, it doesn't make sense since inflated prices would necessarily mean write-offs for us, if we went purchasing. And we're definitely not doing that." In late October, rumors about Porsche's takeover bid caused VW shares to rocket to more than 1,000 euros ($1,292). VW stock prices have since settled to a more reasonable level of around 200 euros, but the securities remain expensive and, many analysts believe, overvalued. In addition, even Porsche is feeling the effects of the global financial crisis and Germany's economic recession.
At a news conference on Wednesday, Nov. 26, Porsche boss Wendelin Wiedeking said that the company would not reach its goal of acquiring a majority stake in VW this year, but that a future takeover was still on the cards.
"We're sticking to our plan of acquiring 50 percent [of VW shares] and trying to get 75 percent," Wiedeking said. "But with prices so high, it doesn't make sense since inflated prices would necessarily mean write-offs for us, if we went purchasing. And we're definitely not doing that."
In late October, rumors about Porsche's takeover bid caused VW shares to rocket to more than 1,000 euros ($1,292). VW stock prices have since settled to a more reasonable level of around 200 euros, but the securities remain expensive and, many analysts believe, overvalued.
In addition, even Porsche is feeling the effects of the global financial crisis and Germany's economic recession.
NEW YORK (Nov. 26) - Non-banks will soon be able to bid for banks on the verge of collapse -- a change that should not only keep more troubled banks from failing, but also benefit companies looking to get funding through deposits and the government. The Federal Deposit Insurance Corp. said Wednesday it is establishing a "modified bidder qualification process" to "allow interested parties that do not currently have a bank charter to participate in the bid process through which failing depository institutions are resolved." As long as an investor has a compliant business plan, enough capital available, and managers that meet strict standards, the FDIC said, that investor can quickly get a bank charter and deposit insurance and bid for a failing bank -- without having an established bank already in place, a requirement of the past. With 22 bank failures so far this year and 171 banks on the FDIC's troubled bank list, the government is worried about more collapses. When a bank fails, it uses up taxpayer dollars. So expanding the list of potential bidders to non-banks could help stanch that tide. But there are advantages to non-banks, too. The desire to become a bank might seem counterintuitive to outsiders watching the companies take massive losses quarter after quarter from their risky loans. But it's the chance to gather deposits -- a good source of funding right now -- and possibly get an investment through the government's Temporary Assets Relief Program, which at this point is only available to commercial banks.
Zombie Economics Though Citicorp is deemed too big to fail, it's hardly reassuring to know that it's been allowed to sink its fangs into the Mother Zombie that the US Treasury has become and sucked out a multi-billion dollar dose of embalming fluid so it can go on pretending to be a bank for a while longer. I employ this somewhat clunky metaphor to point out that the US Government is no more solvent than the financial zombies it is keeping on walking-dead support. And so this serial mummery of weekend bailout schemes is as much of a fraud and a swindle as the algorithm-derived-securities shenanigans that induced the disease of bank zombification in the first place. The main question it raises is whether, eventually, the creation of evermore zombified US dollars will exceed the amount of previously-created US dollars now vanishing into oblivion through compressive debt deflation. ... The credit economy is dead and the dead credit residue of that dead economy is going where dead things go. It came into the world as "money" and it is going out of this world as a death-dealing disease, and we're not going to get over this disease until we stop generating additional zombie money out of no productive activity whatsoever. The campaign to sustain the unsustainable is, besides war, the greatest pitfall this society can stumble into. It represents a squandering of our remaining scant resources and can only produce the kind of extreme political disappointment that wrecks nations and leads to major conflicts between them.
Though Citicorp is deemed too big to fail, it's hardly reassuring to know that it's been allowed to sink its fangs into the Mother Zombie that the US Treasury has become and sucked out a multi-billion dollar dose of embalming fluid so it can go on pretending to be a bank for a while longer. I employ this somewhat clunky metaphor to point out that the US Government is no more solvent than the financial zombies it is keeping on walking-dead support. And so this serial mummery of weekend bailout schemes is as much of a fraud and a swindle as the algorithm-derived-securities shenanigans that induced the disease of bank zombification in the first place. The main question it raises is whether, eventually, the creation of evermore zombified US dollars will exceed the amount of previously-created US dollars now vanishing into oblivion through compressive debt deflation. ... The credit economy is dead and the dead credit residue of that dead economy is going where dead things go. It came into the world as "money" and it is going out of this world as a death-dealing disease, and we're not going to get over this disease until we stop generating additional zombie money out of no productive activity whatsoever. The campaign to sustain the unsustainable is, besides war, the greatest pitfall this society can stumble into. It represents a squandering of our remaining scant resources and can only produce the kind of extreme political disappointment that wrecks nations and leads to major conflicts between them.
In mummers' plays, the central incident is the killing and restoring to life of one of the characters. The characters may be introduced in a series of short speeches (usually in rhyming couplets) in which each personage has his own introductory announcement, or they may introduce themselves in the course of the play's action. The principal characters, presented in a wide variety of manner and style, are a Hero, his chief opponent, the Fool, and a quack Doctor; the defining feature of mumming plays is the Doctor, and the main purpose of the fight is to provide him with a patient to cure. The hero sometimes kills and sometimes is killed by his opponent; in either case, the doctor comes to restore the dead man to life.
Now is the time for Mummers Parades in the US. Philadelphia has (or had) a lock on preferred international travel destination for the occasion. But I'll always associate the annual parade and mummery with Thanksgiving Day in Detroit. Oh the irony. Diversity is the key to economic and political evolution.
