Friday, January 15, 2010
The risk that deteriorating government finances could push economies into full-fledged debt crises tops a list of threats facing the world in 2010, according to a report by the World Economic Forum.
Major world economies have responded to the steep downturn created by the financial crisis with stimulus packages and by underwriting private debt obligations, causing deficits to balloon. This may have helped keep a worse recession at bay, but high debt has become a growing concern for financial markets.
The WEF think tank, in its annual Global Risks report ahead of its meeting in Davos, Switzerland, said unsustainable debt levels ranked among the top three risks for the year ahead, alongside underinvestment in infrastructure and chronic diseases driving up health costs and reducing economic growth. (more)
Introduced as an accounting medium in 1990, the euro became an actual currency in 1992. It is at present issued by 16 of the 27 EU member countries, representing some 329 million people. (more)
Boskin, the one-time economic adviser to President George H.W. Bush, says that solid, reliable information is needed by investors, because “as a society, and as individuals, we need to make difficult, even wrenching choices, often with grave consequences.”
To base those decisions on misleading, biased, or manufactured numbers, is not just wrong, “but dangerous,” he wrote in The Wall Street Journal.
But, due to the obvious fudging of numbers involved in the government’s health care insurance industry reform effort, most Americans now believe the health-care legislation will actually raise their insurance costs, rather than reduce them, and increase the federal budget deficit, rather than contain it. (more)
This recast exposes borrowers to an average payment increase of 15 percent and possibly higher if interest rates increase.
During the next two years, a total of $80 billion of prime and Alt-A loans, and a total of $50 billion subprime loans, are due to recast.
This payment shock will have a substantial effect on the recasting population, according to Managing Director Roelof Slump. (more)
The report also showed that 2.21% of all U.S. housing units (1 in 45) received at least one foreclosure filing during the year, up from 1.84% in 2008, 1.03% in 2007 and 0.58% in 2006.
In December, foreclosures jumped 14 percent from the previous month. (more)
VIOLENT PROTESTS IGNITED BY SOARING FOOD PRICES TOPPLED ON APRIL 12 PRIME MINISTER Jacques Edouard Alexis of Haiti, the poorest country in the Americas. It was the first government in the world that fell victim to angry people suffering from high food costs due to rising fuel prices, weather problems, increased demand in China and India, low global stocks, the use of crops to create biofuels and commodity speculation.
Food riots have also erupted in more than a dozen countries. (more)
There were 444,000 initial job claims filed in the week ended Jan. 9, up 11,000 from a revised 433,000 the previous week, the Labor Department said in its weekly report.
A consensus estimate of economists surveyed by Briefing.com expected new claims to rise to 437,000.
The 4-week moving average of initial claims was 440,750, down 9,000 from the previous week's revised average of 449,750. (more)
"It has got to be done. It will be done some day. It may be done with enormous pain. Or it may be done more rationally," said Rudolph Penner, a former head of the nonpartisan Congressional Budget office who co-chaired the 24-strong Committee on the Fiscal Future of the United States. (more)