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STORIES:
US Postal Service to default on second $5B payment - (finance.yahoo.com) The U.S. Postal Service, on the brink of default on a second
multibillion-dollar payment it can't afford to pay, is sounding a new
cautionary note that having squeezed out all the cost savings within its power,
the mail agency's viability now lies almost entirely with Congress. In an
interview, Postmaster General Patrick Donahoe said the mail agency will be
forced to miss the $5.6 billion payment due to the Treasury on Sunday, its
second default in as many months. Congress has left Washington until after the
November elections, without approving a postal fix. For more than a year, the
Postal Service has been seeking legislation that would allow it to eliminate
Saturday mail delivery and reduce its $5 billion annual payment for future
retiree health benefits.
Spain's rising debt costs eat up austerity gains - (www.telegraph.co.uk) Spain has
pushed through €40bn of fresh austerity measures in the teeth of recession,
despite violent protests across the country and separatist crises in Catalonia
and the Basque region that threaten to break the country apart. Premier Mariano Rajoy has frozen
public pay in 2013 for the third year in a row. The agriculture
ministry and culture expenses will be cut by 30pc and the defence bureacracy by
15pc. It comes on top of a €62bn squeeze already in the pipeline. He brushed
aside warnings that fiscal overkill – at a time when unemployment is already
25pc – could push the country into turmoil, saying he would listen only to the
“silent majority” of responsible citizens. Bowing to pressure from Brussels,
the government has agreed to an independent budget office and a clampdown on
early retirement. Pensions will rise by 1pc, paid for by raiding the social
security reserve fund. The closed professional guilds and old-boy networks
dating back to the Franco era will, in theory, be shaken up. There will be a
lottery tax.
Fed
discloses banks’ emergency borrowing – (www.ft.com)
The US Federal Reserve has started to disclose emergency borrowing by
individual banks, highlighting the risk that they will stop using its
facilities because of stigma. Banks including the Royal Bank of Canada, UBS and Mitsubishi UFJ all
borrowed small amounts from the Fed at a penalty rate during the third quarter
of 2010. Markets will study whether banks that used Fed loans suffer damage to
their reputations. If they do, then bankers may be reluctant to borrow from the
Fed for any reason in the future. The Fed, like other central banks, provides
back up liquidity for banks through its discount window. If a bank is short of
cash overnight, it can borrow from the Fed at a penalty interest rate, provided
that it has good collateral.
Italian unions strike against PM Monti's spending cuts - (www.reuters.com) Up to 30,000
members of two of Italy's biggest unions marched through Rome on Friday to
protest against Prime Minister Mario Monti's cuts in public spending, forcing
the closure of the Colosseum. Opposition to austerity policies aimed at
steering the country out of its economic crisis is growing as the year-long
recession shows no signs of letting up and unemployment continues to rise.
The
US Fed is essentially admitting failure - (www.goldseek.com)
The recent
decision by the US Federal Reserve to contaminate the financial body until it
responds favorably was the last straw in my book. Witness a declaration of
permanent QE and hyper monetary inflation of the most virulent strain,
unsterilized. The USFed is essentially admitting failure. The signal
serves as the loudest death knell for the USDollar among many in a sequence. On
a similar parallel note, lighter and more humorous, one might be reminded of
the pirate swash buckling style of yelling at the swabbies that the beatings
will continue until morale improves. The QE bond monetization of USGovt debt
has turned viral and entrenched. It is sold as stimulus, when in fact it acts
like a giant wet blanket on the USEconomy. It is intended as stimulus to
businesses, but the effect is felt on the financial speculation and on Asian
direct business investment.
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