China told banks to roll-over their loans to local governments according to Financial Times. It’s a delaying tactic to avoid default. A quarter of the country’s output is debt and half the loans come due in three years. This is not going to do much for investor confidence. China is in trouble
China’s inflation rate rose 4.5% in January alone. News smh.com.au
Greece’s Parliament passed harsh new austerity measures demanded by the bailout creditors to include cutting one in five civil service jobs and slashing the minimum wage in half. They had to do it to receive the $171 billion in new rescue loans. Greece would have defaulted next month and would have been out of the eurozone. That would have been a problem for the world markets and Greece.
The people in Greece are suffering so I don’t want to minimize that, but they are now in full-fledged riot mode as if that is productive. Business Week
I hope you have noticed that the U.S. under Obama is heading for a massive increase in unaffordable government jobs and an increased minimum wage (some people think supplemental jobs are a career path and should be given a living wage but some jobs are not meant to be careers. This increase will actually kill job growth.). Greece now has to cut what we are going to do. Wake up America!
Wolfgang Münchau’s article in the FT suggests that Greece and Portugal should go bankrupt. He doesn’t see the bailout working. With the bailout, the Greek debt-to-GDP ratio would fall from its current 160+ per cent to about 120 per cent of GDP by 2020. It is still too high. The 120% is also the Italian debt-to-GDP ratio. Maybe Italy is hopeless as well. In fact, it is more than those three countries. Click here for FT information and Check out the CIA Factbook from last year which compares countries by debt-to-GDP ratio – we’re right in line for disaster.
Check out the EU graph from Q2 2011 –
Now for the good news –
The U.S. Congress has not passed a budget in over a 1000 days (thanks to Harry Reid who said he will not bring a budget to the floor) and he doesn’t need to because Obama will unilaterally incur $1.3 trillion in deficit spending for 2012 without any Congressperson having to go on the record as voting for it. It is the 4th straight year of trillion dollar plus deficits.
Obama’s new budget for 2012 will tax the rich more, eliminate the Bush tax cuts (actually the Clinton tax hikes), cut exemptions (the government likes to call them loopholes), enforce deep Pentagon cuts and cut some other domestic agency, and lower the corporate tax rate with major cuts in exemptions.
“The president will also propose a six-year, $476 billion highway and surface transportation bill [more spending] and $360 billion from curbs to federal health care programs like Medicare and Medicaid. There’s $278 billion more in savings from non-health benefits programs like farm subsidies and federal civilian worker pensions.” SooEveningNews
Not a word about the absurdity of this deficit budget from the lamestream media. Imagine if this was Bush? They’d be screaming it from the rooftops.
I will be negligent to ignore the movement to abandon the U.S. dollar in bilateral trade which is being lead by Iran and Beijing. Read here: ECASB
The following is from an anonymous contributor to my site –