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STORIES:
The
real crash is dead ahead, as 2008 is forgotten - (www.marketwatch.com) “Facebook will become the
poster child for the current social-media bubble,” warns economist Gary
Shilling in his latest Forbes column, “just as Pets.com was for the dot-com
bubble.” Yes, Wall Street is repeating the 2000 dot-com crash as today’s
social-media bubble crashes and burns. Think history folks: Remember 2000-2002?
The economy suffered a 30-month recession and a brutal bear market. The Dow
Jones Industrial Average peaked at 11,722, then crashed, losing over 4,000
points dropping below 7,500, down more than 43%, with massive losses of more
than $8 trillion in market cap. But it gets worse: Shilling’s bluntly warning:
“If we aren’t already in a recession, we’re getting very close.” Yes, he’s more
reserved than Nobel economist Paul Krugman, whose latest book goes beyond
hinting that the America economy is repeating the 2000-2002 recession, His
title says it all: “End This Depression Now!”
A
Extremely Severe Downturn Is On Its Way - (www.businessinsider.com) The European debt crisis is
over! Italy and Spain have it all figured out! The problem isn't unsustainable
debt loads, ineffective economic policies and a lack of competitiveness on the
global stage. It's that evil short sellers are pushing down the shares of
European banks just so they can make a profit. Oy. We've been here before.
Since the 2008 financial crisis, securities regulators around the world have
waged fruitless wars on short selling. The short selling bans in Italy and Spain are
the latest attempt by sovereign nations to blame traders for their problems. It
makes no sense. Short selling, when done legally, is a healthy way for the
market to regulate itself. There is nothing inherently wrong with betting that
a stock will go down when the fundamentals for a company paint an unhealthy
picture. Short sellers, who borrow stocks and sell them with the hopes of
returning the shares later at a lower price, were instrumental in highlighting
problems at scandal ridden companies like Enron and Tyco in the early part of
the "Naughty Aughties."
Only Mario Draghi's ECB can avert global calamity before year's
end - (www.telegraph.co.uk) Mario Draghi has promised the
moon. The European Central Bank’s council had better deliver on his pledge this
week. If it does not, the crisis will surely escalate out of control in August
or soon after. e are beyond the point where a quarter point rate cut will
achieve anything. Nor will it help to launch a fresh round of "temporary
and limited" bond purchases - to use the self-defeating language that Mr
Draghi is forced to utter. The only issue that matters at this late stage is
whether Germany is willing to let the ECB step up to its responsibility as a
global central bank after two years of ideological posturing and take all risk
of sovereign default in Spain and Italy off the table - which it can do easily
enough once it stops playing politics and obeys the “financial stability”
clause (Article 127) of the Lisbon Treaty.
Changed by Wall Street, for Wall Street - (www.nytimes.com) AND so Liborgate drags on and
on and on. Last week, two senior Washington officials — Timothy F. Geithner,
the Treasury secretary, and Gary Gensler, the head of the Commodity Futures Trading Commission —
testified before Congress about the scandal surrounding Libor,
the benchmark for global interest rates. No great revelations were forthcoming.
As we await the full story, it’s worth remembering how Libor, the London
interbank offered rate, became the world standard to begin with. You probably
won’t be shocked to learn that in mortgages,
at least, Wall Street played a role in pushing Libor over another rate
benchmark — one that some bankers say was better for borrowers. Before this
scandal made headlines, few people outside of finance knew what Libor was. But
according to the Center for
Responsible Lending, half of the nation’s adjustable-rate home
mortgages are based on it. Since 2002, more than 12 million A.R.M.’s, worth
$3.5 trillion, have been indexed to Libor, according to the center.
Spain’s unemployment rate hits record 24.6 percent - (www.washingtonpost.com) The number of people
unemployed in Spain hit a record high, official figures showed Friday, as the
International Monetary Fund urged European leaders to quickly fulfill their
promises to help the country and the 17-country eurozone. The recession-hit
country’s unemployment rate rose to 24.63 percent in the second quarter, up
0.19 percentage points from the previous three months, the National Statistics
Institute said. The rate is the highest in the eurozone and is worse than
Spain’s previous record of 24.55 percent hit in 1994, according to the
country’s Labor Force Survey.
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