BBC – House prices fell for the second month in a row in August, according to the Nationwide building society. Prices fell 0.9% last month, following a 0.5% decline in July, Nationwide said, adding that it was the first time that prices had fallen for two consecutive months since February 2009. The average house price now stands at just over £166,500. Nationwide said house prices had “essentially stagnated over the summer”. Read Article
CNBC – September and October hold bad news for stock markets and banks remain overleveraged as we head into the second leg of the financial crisis according to Pedro De Noronha, the managing partner at Noster Capital in London. “We are seeing one of the most challenging years for investors ever,” De Noronha told CNBC Tuesday. “Major investors are simply leaving the market. When it looks like markets are about to fall off the cliff they rally and vice versa. Read Article
Daily Mail – Unemployment is set to soar past 10 per cent in the next five years across large parts of the country, a leading economic think tank has warned. A combination of government spending cuts, sluggish growth in the private sector and weak demand for British exports will push up the jobless rate in the north and in Wales, according to the Centre for Economics and Business Research. But workers in London and the South-East will escape relatively unscathed as the economy slows. Read Article
ABC – Australian shares have reversed some of yesterday’s gain, losing about 1 per cent after economic fears hit Wall Street overnight. The All Ordinaries index closed 44 points lower at 4,439, and the ASX 200 was down 49 points to 4,404. A steep fall in metal prices led the major miners lower, with BHP Billiton sliding 2.2 per cent to $37.05, and Rio Tinto down 1.3 per cent. The major banks also lost ground on economic fears, with Westpac posting the steepest decline of 2.8 per cent. Read Article
BBC – The number of people trying to purchase their first home has fallen sharply in the past year, a report suggests. About 22% of potential buyers are looking to buy their first home in the next year, compared with 31% at the same point in 2009, property website Rightmove.co.uk said. It warned the proportion of first-time buyers was half the level needed for a healthy housing market. Read Article
Business Insider – In real (inflation/deflation-adjusted) terms, when did the US market permanently regain the high reached in 1929? The first chart illustrates two answers to the question. One uses the real price and the other uses the real total return. The remaining charts compare market performance since 2000 with the equivalent elapsed time following the peak in 1929. As the final chart shows, the current real total return over the past decade is worse than the performance over the equivalent timeframe during the Great Depression. Read Article
NY Times – Housing sales in July plunged to their lowest level in more than a decade, exceeding even the grimmest forecasts. The National Association of Realtors said Tuesday that the seasonally adjusted annual sales rate of 3.83 million was 25.5 percent below the level of July a year ago. Read article
Daily Telegraph – Vice-chancellors have been warned that funding may be slashed by 35 per cent over the next five years, it has emerged. The warning – delivered in a series of meetings between Sir Gus O’Donnell, the Cabinet Secretary, and university bosses – would represent the biggest cut in resources since the 1930s, it is claimed. It would be equivalent to the current £5,441 annual Government subsidy for each student being reduced to just £3,537. Read article
Bloomberg – Housing led the U.S. out of seven of the last eight recessions. This time, it may kill the recovery. Home sales collapsed after a federal tax credit for buyers expired in April. Since then, the manufacturing-led expansion, which began in the second half of 2009, has been waning, with jobless claims rising and factory orders falling. “If foreclosures continue to mount and depress home prices, that could send the economy back into a recession,” said Celia Chen, an economist who tracks the industry for Moody’s Analytics Inc. “The housing market and the broader economy are closely intertwined.” Read Article
Money News – The Federal Reserve’s decision to expand its quantitative easing by purchasing more Treasuries is a dangerous one, says Keith McCullough, CEO of research firm Hedgeye. “That could lead the country to the brink of collapse,” he wrote in a Fortune magazine column. McCullough agrees with economists Carmen Reinhart and Ken Rogoff, who recently wrote that government debt in excess of 90 percent of GDP pulls down economic growth. “It’s a point from which it’s almost impossible to return,” McCullough wrote. Government debt will reach 62 percent of GDP by Sept. 30, the Congressional Budget Office predicts. Read Article
Reuters – The number of U.S. workers filing new claims for jobless benefits unexpectedly rose last week to the highest level in close to six months, the latest evidence the economy’s recovery is faltering. Thursday’s data came two days after the Federal Reserve spooked investors by downgrading its assessment of the economy. The increase in jobless claims added to worries in the stock market, which has failed to make any gains this year. Read Article
Sydney Morning Herald – The IMF has effectively pronounced the US bankrupt, and it’s not wrong, writes Laurence Kotlikoff. Let’s get real. The US is bankrupt. Neither spending more nor taxing less will help the country pay its bills. What it can and must do is radically simplify its tax, healthcare, retirement and financial systems, each of which is a complete mess. But this is the good news. It means they can each be redesigned to achieve their legitimate purposes at much lower cost and, in the process, revitalise the economy. Read Article
Telegraph – The banking system could be on the brink of another crisis, according to one hedge fund manager who has taken a series of short positions against some of Europe’s largest financial institutions. London-based fund Noster Capital is betting against five major European banks, including Barclays in the UK, Spain’s BBVA, and Switzerland’s UBS. Pedro Noronha, chief executive of Noster Capital, said he thought many people still failed to understand the extent of the problems facing many banks and were “complacent” about the risks the industry faces. Read Article
Independent – Bank of England governor Mervyn King warned of “a choppy recovery” for the UK economy today as he braced households for slower growth and stickier than expected inflation. The Bank’s latest forecasts showed slower growth than previously thought next year as Chancellor George Osborne’s emergency Budget kicks in, while inflation will stay above the Bank’s 2% target until the end of 2011 due to next January’s VAT hike. Read Article
BBC – The US Federal Reserve has taken a step towards boosting economic recovery, by saying it will use proceeds from its investments in mortgage securities to buy longer-term government debt. The move means that it will maintain the size of stimulus spending programme, pumping in money to try to bolster the economy. The Fed warned that the pace of recovery had slowed in recent months. It also kept interest rates unchanged at between zero and 0.25%.
There are fears among some, including former chairman of the US Federal Reserve, Alan Greenspan, that the US economy could be heading towards a double-dip recession. Read Article
Wall Street Journal – The Federal Reserve, facing an economic recovery that it termed “more modest” than anticipated, said Tuesday it will stop shrinking its huge portfolio of securities by reinvesting the proceeds of maturing mortgages in U.S. Treasury debt. The Fed move is largely symbolic and is unlikely to stimulate the economy significantly. Read Article
Guardian – Employers in the US shed twice as many jobs as expected in July, adding to fears that the recovery in the world’s largest economy will not see a revival in employment. The dismal US job figures came as the National Institute of Economic and Social Research predicted a protracted depression for the UK economy. Read Article
Guardian – The threat of a double-dip recession intensified today after it emerged that Britain’s powerhouse services sector saw its growth stall last month, jeopardising hopes of a sustained recovery. As the Bank of England prepared to announce its latest decision on interest rates tomorrow, a survey of the sector that makes up the bulk of Britain’s economic output showed that its growth slipped to its slowest since it emerged from recession a year ago. Read Article
Washington Post – It’s the Sophie’s choice of budget decisions: Should we cut Medicaid? Fire teachers? Or slash food stamps? How about all three? In order to get less Medicaid and teacher funding than we actually need, we’re cutting food stamps by $6.7 billion (and closing some foreign tax loopholes, rescinding some spending decisions and changing Medicaid’s drug pricing). Read article
Reuters – U.S. bank failures reached 108 so far in 2010 on Friday as regulators seized five small banks in the Pacific Northwest and the Southeast, none publicly traded. Bank failures are expected to peak this quarter, with the industry slowly recovering from large portfolios of bad loans, many tied to commercial real estate. Read Article
Reuters – Foreclosures rose in 3 of every four large U.S. metro areas in this year’s first half, likely ruling out sustained home price gains until 2013, real estate data company RealtyTrac said on Thursday. Unemployment was the main culprit driving foreclosure actions on more than 1.6 million properties, the company said. “We’re not going to see meaningful, sustainable home price appreciation while we’re seeing 75 percent of the markets have increases in foreclosures,” RealtyTrac senior vice president Rick Sharga said in an interview. Read Article
On Saturday 10th July, the editor of www.OpenYourEyesNews.com, James Fairbairn, made another guest appearance on 720 ABC Radio in Perth, Western Australia to discuss with host, James Lush, some of the key news events of recent weeks. The interview covered the following:
Check out our latest interview on our new Podcast channel and please subscribe to keep up to date with future episodes of OpenYourEyesNews
Times of India – The count of bank failures in the US has crossed the century-mark in 2010 and as many as 17 entities have folded up so far this month. Mostly small and medium banks are bearing the brunt of the collapse, as they continue to wobble under the prolonged sluggishness in financial conditions. On an average, nearly 15 banks have bit the dust every month so far this year. According to the Federal Deposit Insurance Corporation (FDIC), which insures deposits at over 8,000 banks, as many as 103 entities have gone out of business so far this year. In 2009, a staggering 140 banks were shut down. Read Article
New York Times – By most measures, Harley-Davidson has been having a rough ride. Motorcycle sales are falling in 2010, as they have for each of the last three years. The company does not expect a turnaround anytime soon. But despite that drought, Harley’s profits are rising — soaring, in fact. Last week, Harley reported a $71 million profit in the second quarter, more than triple what it earned a year ago. This seeming contradiction — falling sales and rising profits — is one reason the mood on Wall Street is so much more buoyant than in households, where pessimism runs deep and joblessness shows few signs of easing. Many companies are focusing on cost-cutting to keep profits growing, but the benefits are mostly going to shareholders instead of the broader economy, as management conserves cash rather than bolstering hiring and production. Harley, for example, has announced plans to cut 1,400 to 1,600 more jobs by the end of next year. That is on top of 2,000 job cuts last year — more than a fifth of its work force. Read Article
Associated Press – Moody’s Investors Service has downgraded its rating on Irish government bonds by one notch, citing a deteriorating economic outlook. Moody’s said Monday that it is concerned about the government’s loss of financial strength, weaker prospects for growth in the economy and liabilities in the banking system. In a statement from its office in Frankfurt, Moody’s says it has dropped its rating on government bonds from Aa1 to Aa2. Read Article
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