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STORIES:
Angry Bagmaker Shows China Slowdown Worst In Wenzhou - (www.bloomberg.com) Jiang Xiangsong has 18 days
to pay a 2 million yuan ($314,000) bank debt or his suitcase company in eastern China will
go bankrupt. He’s close to tears as he realizes his last hope, a
government-backed office, won’t help. “This is totally useless: If I had any
collateral, why the hell would I come here?” he yells at an official in
Wenzhou’s state-run loan service, set up to help small businesses after rising
bankruptcies and suicides prompted Premier Wen
Jiabao to visit in October and pledge support. Wenzhou’s more
than 400,000 businesses make everything from shoes in dusty side streets to
synthetic leather in dilapidated factories, much of it financed by unregulated
lenders that spread during China’s record 2009-10 credit boom. The decline of
so-called shadow banking in the city, triggered by Wen’s move to rein in a
national property bubble, has left Wenzhou bearing the brunt of the country’s
economic slowdown.
Rajoy Declares War On Central Bankers To Counter Crunch - (www.bloomberg.com) Spain and Italy appealed to European policy
makers to step up their response to the financial crisis after a 100 billion-euro
($125 billion) lifeline for Spanish banks failed to calm markets. Spanish Prime
Minister Mariano Rajoy said today he’ll
“battle” central bankers refusing to buy debt from peripheral nations. Rajoy
published a letter to European Union leaders calling for the European Central Bank to buy debt from
the countries struggling to shore up their finances. “That is the battle we
have to wage in Europe,” Rajoy told the Spanish parliament
in Madrid today.
“I am waging it.” His Italian counterpart, Mario
Monti, told lawmakers in Rome Europe faces a “crucial” moment. The
leaders of southern Europe’s biggest economies went on the offensive as bond
yields jumped following the announcement of a bailout for Spanish banks that
was intended to quell concern over the countries’ finances. The decline wiped
out the effects of 1 trillion euros in ECB loans for euro-region banks that had
held yields in check since December.
Analysis: Endless QE? $6 trillion and counting - (www.reuters.com) Many more years of money
printing from the world's big four central banks now looks destined to add to
the $6 trillion already created since 2008 and may transform the relationship
between the once fiercely-independent banks and governments. As rich economies
sink deeper into a slough of debt after yet another wave of euro financial and
banking stress and U.S. hiring hesitancy, everyone is looking back to the U.S.
Federal Reserve, European Central Bank, Bank of England and Bank of Japan to stabilize the situation once
more. What's for sure is that quantitative easing, whereby the "Big
Four" central banks have for four years effectively created new money by
expanding their balance sheets and buying mostly government bonds from their
banks, is back on the agenda for all their upcoming policy meetings.
Italy Tax Increases Backfire As Monti Tightens Belts - (www.bloomberg.com) Italian Prime Minister Mario
Monti is facing signs that tax increases are beginning to
backfire as his new levy on real estate goes into effect.
Value-added
tax receipts have declined since Monti’s predecessor, Silvio
Berlusconi, raised the rate by 1 percentage point in September as
the economy was slipping into recession, government data released June 5
showed. The amount collected fell in the 12 months ended April 30 to the lowest
since 2006. Finding the right deficit-reduction mix as Monti fights to meet
budget targets is critical for Italy to avoid becoming the biggest victim yet
of Europe’s financial crisis. A slump that is driving up welfare spending is
adding urgency to Monti’s effort to make the economy more competitive amid a
growing backlash across Europe against austerity.
Why
Obama's JOBS Act Couldn't Suck Worse - (www.rollingstone.com) I thought there was a chance
Barack Obama was listening to the popular anger against Wall Street that drove
the Occupy movement, that decisions like putting a for-real law enforcement guy
like New York AG Eric Schneiderman in charge of a mortgage fraud task force
meant he was at least willing to pay lip service to public outrage against the
banks. Then the JOBS Act happened. The "Jumpstart Our
Business Startups Act" (in addition to everything else, the Act has an
annoying, redundant title) will very nearly legalize fraud in the stock market.
In fact, one could say this law is not just a sweeping piece of deregulation
that will have an increase in securities fraud as an accidental, ancillary
consequence. No, this law actually appears to have been specifically written to
encourage fraud in the stock markets. Ostensibly, the law makes it easier for
startup companies (particularly tech companies, whose lobbyists were a driving
force behind its passage) to attract capital by, among other things, exempting
them from independent accounting requirements for up to five years after they
first begin selling shares in the stock market. The law also rolls back rules
designed to prevent bank analysts from talking up a stock just to win business,
a practice that was so pervasive in the tech-boom years as to be almost
industry standard.
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