U.S.
disability rolls swell in a rough economy - (www.washingtonpost.com) The
huge mills along the Penobscot River roared virtually nonstop for more than a
century, turning the dense Maine forests into paper and lifting the thousands
of men who did the hot and often backbreaking work into the middle class. But
the mills have struggled in recent years, shedding thousands of jobs. Now this
area, whose well-paying jobs provided an economic foothold for generations of
blue-collar workers, has become a place where an unusually large share of the
unemployed are seeking economic shelter on federal disability rolls. Between
2000 and 2012, the number of people in Penobscot County receiving Social
Security disability benefits skyrocketed, rising from 4,475 to 7,955 — or
nearly one in 12 of the county’s adults between the ages of 18 and 64,
according to Social Security statistics. The fast expansion of disability here is part
of a national trend that has seen the number of former workers receiving
benefits soar from just over 5 million to 8.8 million between 2000 and
2012. An additional 2.1 million dependent children and spouses also receive
benefits. The crush of new recipients is putting unsustainable financial
pressure on the program. Federal officials project that the program will
exhaust its trust fund by 2016 — 20 years before the trust fund that supports
Social Security’s old-age benefits is projected to run dry.
Puerto
Rico is living an impoverished debt nightmare reminiscent of southern Europe or
Detroit - (www.qz.com) Puerto
Rico's rap sheet isn't so different from that of many troubled European
countries. It's been in a recession since 2006--longer even than Greece. And
like many euro zone countries, it can't inflate its way out of its problems
because it uses the US dollar. ... Yields on Puerto Rican municipal bonds have
doubled from a year ago, as investors have grown worried that the little US
territory won't be able to pay off its massive debt pile. And if you're an
American the drama could hit close to home; there's a decent chance that your
pension fund has some Puerto Rican bonds in its portfolio. Detroit's July
bankruptcy hasn't helped--the city's potentially huge losses for bondholders
are making investors in the entire asset class jittery. Yields on Puerto Rican
municipal bonds have doubled from a year ago, as investors have grown worried
that the little US territory won’t be able to pay off its massive debt pile.
And if you’re an American the drama could hit close to home; there’s a decent
chance that your pension fund has some Puerto Rican bonds in its portfolio.
Detroit’s July bankruptcy hasn’t helped—the city’s potentially huge losses
for bondholders are making investors in the entire asset class jittery.
Italy's
Oldest Bank Monte Paschi "BAILS-IN" BONDHOLDERS TO TUNE OF $650
MILLION! - (www.silverdoctors.com) While
the Monte Paschi bail-in for now is limited to Tier 1 bondholders, the bank
made it clear it likely will not be able to continue paying Tier 2 bondholders
much longer either: ... The cost of insuring against losses on Monte Paschi's
subordinated debt rose, with credit-default swaps covering 10 million euros of
the bank's junior bonds for five years costing 2.1 million euros in advance and
500,000 euros annually, according to data provider CMA. That signals a 49.5
percent probability of default within that time.
Fed
reveals weak spot in superhero powers - (www.ft.com) Superman
had issues with Kryptonite. For Achilles, it was his heel. With central
bankers, is it communicating with markets? The US Federal Reserve startled
investors round the globe this week by deciding not to start scaling back its
$85bn a month of asset purchases, or quantitative easing. Bond and share prices
jumped sharply on the prospect of unexpectedly undiminished Fed largesse. But
even as they pocketed gains, investors wondered if they had misunderstood Ben
Bernanke, Fed chairman. Based on hints dropped since May, the consensus view had
been for a $10bn to $15bn reduction in the pace of purchases. Central banks
have sought to increase the effectiveness of their communication during the
years of financial crisis. By extending their influence over markets’
expectations of future interest rates, they hope to leverage their superhero
powers. But the Fed’s last minute hesitation was a reality check.
Bears
Retreating as European Shorts Drop $80 Billion to 2006 Low - (www.bloomberg.com) The
retreat by European bears is turning into a rout as equity traders reduce bets
against the region’s stocks by about $80 billion to the lowest level in at
least seven years. Borrowed shares of Euro Stoxx 50 Index (SX5E) companies, an indication of wagers
against equities, have fallen to 1.7 percent of the total outstanding from 3.2
percent two years ago and 24 percent at the height of the financial crisis,
according to data from Markit, the London-based research firm. Bullish bets on
Europe have reached the most since 2007 in a Bank of America Corp. survey of
money managers who oversee $518 billion. Investors are regaining confidence,
squeezing pessimists who say the economy remains sluggish outside of Germany
and point to record-low trading volume as a lack of conviction in the Euro
Stoxx’s 61 percent rally of the past two years. Besides gains in stocks from
Banco Bilbao Vizcaya Argentaria SA toRenault SA (RNO),
yields on Spanish and Italian bonds have declined to a two-year low compared
with German bunds and the euro has strengthened 4.6 percent to $1.35 in the
past six months.
The
Key to Forward Guidance? Don’t Give It, Fischer Says - (online.wsj.com)
Fed Faces New Era of Thinking Global as Yellen Nomination Nears - (www.bloomberg.com)
Fed Faces New Era of Thinking Global as Yellen Nomination Nears - (www.bloomberg.com)
Merkel must reach out to leftist rivals after poll
triumph - (www.reuters.com)
Euro-Area Services Strengthen as Demand Improves - (www.bloomberg.com)
Euro-Area Services Strengthen as Demand Improves - (www.bloomberg.com)
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