Here Comes The Double Dip Pt. 4 (merged) Archived

[OilFinder2]

You can tell the doomers are desperate when they post articles which are almost a day old in order to support their position on a news story which is now less than a couple hours old.



Euro area agrees bond support for Italy, Spain

Paul Taylor and Luke Baker, Reuters
11:06 p.m. CDT, June 28, 2012

BRUSSELS (Reuters) - Euro zone leaders agreed on Friday to take emergency action to bring down Italy's and Spain's spiraling borrowing costs and to create a single supervisory body for euro zone banks by the end of this year, a first step towards a European banking union.

Responding to pleas from Spanish and Italian leaders, a midnight summit of the 17-nation currency area agreed that euro area rescue funds could be used to stabilize bond markets without forcing countries that comply with EU budget rules to adopt extra austerity measures or economic reforms.

After hours of argument, they also agreed that the bloc's future permanent bailout fund, the European Stability Mechanism, would be able to lend directly to recapitalize banks without increasing a country's budget deficit, and without preferential seniority status.

"The process was tough, the outcome was good," Italian Prime Minister Mario Monti told reporters, adding that Italy did not intend "at this time" to apply for the emergency support.

Countries that requested bond support from the rescue fund would have to sign a memorandum of understanding setting out their existing policy commitments and agreeing a timetable. But they would not face the intrusive oversight of a "troika" of international lenders to which Greece, Ireland and Portugal have been subjected, Monti said.

Spain and Italy had earlier withheld their agreement to a growth package at a European Union summit to demand emergency action to bring down their spiraling borrowing costs, which threaten to force the third and fourth largest economies in the euro zone out of the capital markets.

[...]

[OilFinder2]

This just gets better and better. Pity the poor, hapless, pathetic doomers!



EU Leaders Ease Debt-Crisis Rules On Spain In Merkel Retreat

Euro-area leaders agreed to ease repayment rules for emergency loans to Spanish banks and relax conditions on potential help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis.

After 13 1/2 hours of talks ending at 4:30 a.m. in Brussels today, leaders of the 17 euro countries dropped the requirement that governments get preferred creditor status on crisis loans to Spain’s blighted banks, European Union President Herman Van Rompuy said. Banks can also be recapitalized directly with European bailout funds rather than being channeled through governments, he said.

[...]

[OilFinder2]

CHART OF THE DAY: The Most Important Chart In Europe Just Had Its Best Day Since 1993

We've been following one chart closely since February, and it just had its best day since 1993.

While most analysts tend to cite 10-year bonds as the standard for sovereign borrowing costs, in Europe we've repeatedly emphasized the importance of borrowing for less than three years.

That's because three-year long-term refinancing operations (essentially, measures from the European Central Bank to provide unlimited cheap cash to banks) have allowed governments to fund themselves more cheaply and easily in time periods less than that.

Thus, yields on these bonds in Spain and Italy are a good indicator for sentiment about the euro crisis, since speculation against bonds demonstrates significant doubt about whether both countries will be able to fund themselves even with help from the ECB.

Going by this indicator, it looks like EU leaders have struck a good blow towards faith in the markets, at least in the short term.

They just announced a plan to recapitalize banks directly with the two European bailout funds—the European Financial Stability Facility and the European Stability Mechanism. The latter is expected to go into effect this summer. This move demonstrated a transformation in European leaders' willingness to move forward with crisis measures, in this case to take control of their failing banking system.

Yields on two-year Spanish bonds have collapsed 114 basis points, from over 5.5 percent to less than 4.28 percent.

This is an unprecedented basis point drop in two-year yields since the start of the euro. The last time they fell this much was on May 13, 1993, when yields fell 116 bps from 12.29 percent to 11.13 percent. Not only was this before the euro, but yields were much higher than, making it a much smaller percentage point drop.



[...]

[OilFinder2]

European Stocks Surge Most in Seven Months on Summit Decisions

June 29 (Bloomberg) -- European stocks rallied the most in seven months after policy makers eased repayment rules for Spanish banks, relaxed conditions for possible aid to Italy and unveiled a $149 billion growth plan for the region’s economy.

Banco Santander SA paced banks higher, jumping 6.4 percent, after euro-area leaders at a summit in Brussels dropped a requirement that their governments get preferred-creditor status on crisis loans to Spain’s lenders. Actelion Ltd. climbed 2 percent after getting U.S. approval for its Veletri drug.

The Stoxx Europe 600 Index rose 2.6 percent to 251.14 at 4:30 p.m. in London, capping a weekly gain of 1.8 percent. The benchmark gauge jumped 4.7 percent this month as Greece formed a coalition government after its second election in six weeks, easing concern the nation will leave the euro.

“The European summit has given a very precious chance to Italy and Spain,” said Theodore Krintas, managing director of Attica Wealth Management, which manages 100 million euros ($126 million). “They’re addressing directly the needs of both countries to reduce their funding costs. They will be addressing all other banking unification issues in a very short period of time. By European standards, this is a quick move.”

[...]

National benchmark indexes advanced in all 18 western- European markets. The U.K.’s FTSE 100 Index rose 1.4 percent, France’s CAC 40 Index gained 4.5 percent and Germany’s DAX Index added 4.2 percent. Italy’s FTSE MIB Index climbed 6.6 percent, the most since May 2010.

[...]

[dolanbaker]

Worried sheep in a field surrounded by wolves will cheer up if just one wolf blinks and one sheep sees it as good news the rest will follow it, BAAAAH!

[OilFinder2]

S&P 500 Caps Best June Since 1999 On European Agreement

The Standard & Poor’s 500 Index capped the biggest June gain since 1999 after European leaders reached an agreement that alleviated concern banks will fail.

The S&P 500 jumped 2.5 percent to 1,362.15 at 4 p.m. New York time, rallying 4 percent in June. All 10 groups in the S&P 500 rose as industrial, technology and commodity shares had the biggest gains.

“We are getting a relief rally,” said Christopher Orndorff, who helps oversee $450 billion as senior portfolio manager at Western Asset Management Co. in Pasadena, California. Europe’s deal “appears to be a step in the right direction in terms of solving the problem from a longer term perspective.”

Stocks rallied as European leaders agreed to relax conditions on emergency loans for Spanish banks and possible help for Italy as an outflanked German Chancellor Angela Merkel gave in on expanded steps to stem the debt crisis.

[...]

[Lore]

What a mess, haven't we been here before. We're seeing sovereign debt exchanged for private debt on the back of a lick and a prayer that down the road austerity and economic change will take place. Don't hold your breath. I give the global relief rally a couple of weeks before poor economic reports once again sinks it.

[dolanbaker]

What a mess, haven't we been here before. We're seeing sovereign debt exchanged for private debt on the back of a lick and a prayer that down the road austerity and economic change will take place. Don't hold your breath. I give the global relief rally a couple of weeks before poor economic reports once again sinks it.

Yep! Just wait until they open up this "pig in a poke" to find noting but a worthless old cat!

1, Deliver speech declaring a solution to the Eurozone banking crisis.
2, ????????
3, Profit!

[TheAntiDoomer]

[b]Hiring rebounds for state, local governments
By Dennis Cauchon, USA TODAY[\b]

http://www.usatoday.com/news/nation/sto ... 55868796/1

States, cities, counties and school districts hired 828,000 workers in the first four months of the year, up 20% from a year earlier, and the most since 2008, according to a USA TODAY analysis of the government's Job Openings and Labor Turnover Survey. The number of job openings at state and local governments also hit a four-year high.

[Plantagenet]

[b]Hiring rebounds for state, local governments
By Dennis Cauchon, USA TODAY[\b]

http://www.usatoday.com/news/nation/sto ... 55868796/1

States, cities, counties and school districts hired 828,000 workers in the first four months of the year, up 20% from a year earlier, and the most since 2008, according to a USA TODAY analysis of the government's Job Openings and Labor Turnover Survey. The number of job openings at state and local governments also hit a four-year high.

Sounds like the government sector is still doing fine. Its too bad we can't say the same thing about the private sector

[TheAntiDoomer]

Sigh planted agent, did you read the article? Public hiring is up because tax receipts are up! Why are tax receipts up? Because the private sector is growing! Duh!

[Plantagenet]

the private sector is growing! Duh!

Jeez are you a thickie. Of course the private sector is growing---but its growing v e r y s l o w l y. US GDP increased in the first quarter...by a grand 1.9%.

The economy is growing but so slowly that we've been in a jobless recovery for 36 months now. Thats not enough to even keep up with population growth. The unemployment rate is still higher than it was when Obama took Office. Don't you know that when the millions of people who can't find jobs and have now been reclassified as "discouraged workers" are counted in the work force the actual unemployment rate is in the high teens. Even excluding the millions of discouraged workers, the GDP is growing so slowly the unemployment rate ticked back up last month.

[TheAntiDoomer]

^dude if you don't think an increase in gov employment plus increases in private employment won't bring done the unemployment rate you're clueless.

[Daniel_Plainview]

OMG ... there's so much dire economic news today, I really don't know where to begin.

So, first we have an unravelling of Merkel's smoke-and-mirrors:

Finland and Holland to block Merkel's ESM secondary market bond buying

(Reuters) - Finland and the Netherlands will block the euro zone's permanent bailout fund from buying bonds in secondary markets, the Finnish government said on Monday, despite European leaders' decision last week that rescue funds be available to stabilise markets.

Euro zone leaders agreed at the summit on steps to shore up their monetary union and bring down borrowing costs for Spain and Italy, but they had given few details on the use of the temporary EFSF and permanent ESM rescue funds.

ESM bond buying from secondary markets would require unanimity and that seems unlikely because Finland and the Netherlands are against it, the Finnish government said a report to a parliamentary committee.

Remember last week when the Cornies became ecstatic that YET ANOTHER BAILOUT had been announced?

Oops!



Once again, the poor cornies are faced with nothing but smoke and mirrors!

Just to keep track of Eurozone countries needing a bailout:

Portugal
Ireland (1st bailout to be re-negotiated)
Greece (3d bailout in the works)
Cyprus
Spain (bonds are soaring; $125 billion direct bailout of banks)
Italy (bonds are soaring; banks are in dire straights)

[Daniel_Plainview]

June Mfgr ISM Tumbles Below 50, contracting for the first time since July 2009 ! ! !

(Tempe, Arizona) — Economic activity in the manufacturing sector contracted in June for the first time since July 2009; however, the overall economy grew for the 37th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 49.7 percent, a decrease of 3.8 percentage points from May's reading of 53.5 percent, indicating contraction in the manufacturing sector for the first time since July 2009, when the PMI registered 49.2 percent. The New Orders Index dropped 12.3 percentage points in June, registering 47.8 percent and indicating contraction in new orders for the first time since April 2009, when the New Orders Index registered 46.8 percent. The Production Index registered 51 percent, and the Employment Index registered 56.6 percent. The Prices Index for raw materials decreased significantly for the second consecutive month, registering 37 percent, which is 10.5 percentage points lower than the 47.5 percent reported in May. Comments from the panel range from continued optimism to concern that demand may be softening due to uncertainties in the economies in Europe and China."

Ah Crap! The USS Cornucopia is taking on yet more water ...

[TheAntiDoomer]

Construction Spending in U.S. Climbs to More Than Two-Year High
http://www.bloomberg.com/news/2012-07-0 ... -high.html

The 0.9 percent climb followed a 0.6 percent increase in April that was bigger than previously estimated, Commerce Department figures showed today in Washington. The median estimate of economists surveyed by Bloomberg News called for a 0.2 percent increase. The value of all projects rose to $830 billion at an annual rate, the most since December 2009.

A sustained housing recovery is supporting the construction sector even as public spending weakens. Concern over the European debt crisis and domestic fiscal uncertainty may also limit business confidence, restraining commercial projects.

“We’re definitely seeing a rebound in home building, absolutely no question about that,” Gus Faucher, a senior economist at PNC Financial Services Group Inc. in Philadelphia, said before the report. “Construction is going to be a positive for growth, primarily on the residential side this year, and maybe more on the commercial side in 2013.”

The cornucopia sails on!!

[Daniel_Plainview]

More on Eurozone fiasco:

Finland and Holland to Veto Eurozone Bailout

Reuters) - Finland and the Netherlands, the euro zone's most hardline creditor states, cast the first doubts on Monday on a European summit deal designed to save Spain and Italy from being engulfed by the currency bloc's debt crisis.

The Finnish government told parliament that Helsinki and its Dutch allies would block the euro zone's permanent bailout fund buying bonds in secondary markets, despite an agreement among leaders' last Friday that the fund could be activated to stabilise markets.

The euro fell, European stocks gave up gains and safe-haven German Bunds reversed losses on news of the Finnish statement, which raised fears that the latest deal which drew a positive initial market reaction could unravel.

Several previous market rallies after euro zone crisis agreements have fizzled within a day or two as investors have fretted about the lack of detail, the risk of delay and national vetoes, or the inadequate size of the rescue funds available.

The 17 euro zone leaders agreed in Brussels on steps to shore up their monetary union and bring down borrowing costs for Spain and Italy, regarded as too big to fail but also too expensive to rescue if they are shut out of markets. They gave few details on the use of the temporary EFSF and permanent ESM rescue funds.

ESM bond buying in secondary markets would require unanimity and that seems unlikely because Finland and the Netherlands are against it, the Finnish government said a report to a parliamentary committee.

The report gave no explanation for the apparent volte-face but EU diplomats noted that a Finnish proposal that Spain and Italy should issued covered bonds, backed by state assets or future revenues, to avoid Helsinki having to demand collateral for any bailout loans, failed to find agreement last week.

However Prime Minister Jyrki Katainen's spokesman said the ESM stance had nothing to do with others blocking Finland's proposal. Helsinki simply did not consider secondary market purchases an effective way to counter the crisis, he told Reuters.

Dutch Finance Ministry spokesman Niels Redeker said the Netherlands did not support using the bailout fund to buy bonds on the secondary market and would evaluate purchases case-by-case.

Dutch Prime Minister Mark Rutte said last Friday he was "not a big fan of purchasing bonds with the existing instruments because it is costly," Redeker said.

Euro zone crisis in graphics: r.reuters.com/hyb65p

NO TREATY CHANGE

EU officials said the leaders had agreed in principle that the rescue funds would be empowered to buy bonds both at auction when they are first issued, and on the open market, if a government makes a request and signs a memorandum of understanding on macroeconomic conditions.

A European Commission spokesman also insisted that no changes to the treaty governing the ESM were required to enable the fund to recapitalise banks directly.

He was responding to doubts raised in the Netherlands by legal experts who said the treaty would have to be amended and ratified again.

The Commission's spokesman on economic and monetary affairs said articles 14-18 of the treaty set out the instruments the European Stability Mechanism (ESM) has at its disposal to maintain financial stability in the euro area.

"Article 19 continues that the board of governors may decide to make changes to that list," spokesman Simon O'Connor told a regular news briefing.

"That is our understanding of where we stand on that, that it would not require a change to the treaty," he said.

A Dutch newspaper quoted legal scholars as saying the Dutch parliament and other national parliaments in Europe would have to ratify the euro zone's ESM rescue fund again after EU leaders decided to directly capitalise banks from the fund.

"Direct funding to banks is not possible under the current treaty," professor of constitutional and administrative law Wim Voermans of Leiden University was quoted as saying in Dutch daily Het Financieele Dagblad.

Voermans' colleagues at Leiden University, Michiel van Emmerik and Michal Diamant, supported his view, the paper said.

AVOID DELAY

Sources close to European Council President Herman Van Rompuy, who chaired last week's summit, said the leaders had taken great care to avoid any decision that would require ratification because of bitter past experience.

A deal to expand the scope and effective lending capacity of the temporary European Financial Stability Facility (EFSF) last July exacerbated bond market turmoil after a brief rally when it became clear it would take months to ratify.

Finland threw a spanner in the works by demanding collateral on its share of EFSF loans to Greece, requiring months of tricky negotiation, and Slovakia's coalition government fell apart over the EFSF deal, delaying ratification until mid-October.

Other factors that have spooked investors include the risk of Germany's powerful constitutional court delaying the entry into force of the ESM and possibly placing restrictions on its scope of action, and the fact that the Brussels summit did not increase the overall size of the rescue funds.

Some investors may calculate that the sums available to support Spain and Italy in the bond market are too small to bring their borrowing costs down in a sustained way. The European Central Bank spent some 210 billion euros in the last two years to buy Greek, Irish, Portuguese, Spanish and Italian bonds without achieving any lasting improvement.

In Athens, ECB executive board member Joerg Asmussen ruled out another widely canvassed solution to the debt crisis, backed by France, which would involve giving the ESM a banking licence and allowing it to borrow from the central bank.

"There is no silver bullet," he said in a speech. "Those who advocate 'once and for all solutions' - be that a banking licence for the ESM, a European transfer system, or the like - are contenting themselves with a superficial analysis."

Asmussen has become the ECB's main international negotiator since he joined the board at the start of this year. He also urged Greece to focus on implementing economic reforms rather than losing time trying to renegotiate its EU/IMF bailout.

[TheAntiDoomer]

Why health reform is good news for the U.S. economy

http://opinion.financialpost.com/2012/0 ... -recovery/

1. The U.S. spent 16.2% of its GDP on health care plus up to 3% more on litigation concerning medical bills while other countries spend 10% and nothing on litigation because bills are paid by everyone. Lawsuits to recoup medical costs will slow because of Obamacare.

2. People with serious illnesses are uninsurable and are stuck in jobs they cannot leave or remain unemployed because they are unemployable. This will end if everyone’s covered.

3. Tens of millions of uninsured people in the U.S. end up with health problems that become a drain on society and economy. Under this reform, the 50 million uninsured people, mostly young healthy people, will have to be insured or pay fines, which will reduce overall costs because the paying base will be spread over the entire population.

4. Doctor, nursing, hospital and drug costs are out of control in the U.S. because of litigation and greed. American doctors over-service those with health insurance and fear of litigation has led to over-prescribing, testing and excessive costs. That fear has been removed.

[Daniel_Plainview]

New Orders Plunge from 60.1 to 47.8 !!!

(Tempe, Arizona) — Economic activity in the manufacturing sector contracted in June for the first time since July 2009; however, the overall economy grew for the 37th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business®.

The report was issued today by Bradley J. Holcomb, CPSM, CPSD, chair of the Institute for Supply Management™ Manufacturing Business Survey Committee. "The PMI registered 49.7 percent, a decrease of 3.8 percentage points from May's reading of 53.5 percent, indicating contraction in the manufacturing sector for the first time since July 2009, when the PMI registered 49.2 percent.

Yuck.

New orders went from 60.1 to 47.8, from reasonably-strong expansion to outright contraction. Order backlog continued to contract and exports moved into contraction. Prices are collapsing; there's simply no means to force price increases to stick -- or even maintain them.

[TheAntiDoomer]

U.S. home prices rose in May - CoreLogic

http://in.reuters.com/article/2012/07/0 ... 7K20120702

U.S. home prices rose in May in a fresh sign the battered sector is stabilizing, data analysis firm CoreLogic said on Monday.

CoreLogic's home price index gained 1.8 percent from April and was up 2.0 percent from a year earlier.

Excluding distressed sales, prices fared even better, gaining 2.3 percent in May and 2.7 percent from a year ago. Homeowners in danger of foreclosure, or in "distress", often sell their homes at a significantly reduced price