But that doesn’t mean there isn’t lots happening in Europe, which we’ll take up after things closer to home.
That recovery? It’s got teh slowz — but one sector is looking good today, and that’s employment.
Jobless numbers take another dip
The latest numbers from the Department of Labor show nearly a quarter-million new jobs added in January, leading to a drop in the official unemployment rate.
When citing jobless figures it’s important to note that they don’t include people who have been unemployed so long that they’ve given up, or those who have found new jobs for reduced pay, lower benefits, and longer hours.
That said, here’s the story from From Don Lee of the Los Angeles Times:
The U.S. job market strengthened at the start of the year as employers added an unexpectedly large number of new jobs and the unemployment rate in January dropped for the fifth straight month.
The Labor Department said Friday that employers nationwide added 243,000 net new jobs in January – about 100,000 more than what analysts were forecasting. Job gains were broad-based, powered by increases in manufacturing, professional and business services such as accounting and engineering, and in leisure and healthcare industries.
Government, however, continued to trim its payrolls, and the information sector also reported job losses, notably at motion pictures and sound recording firms. With the step-up in private-sector jobs, the nation’s unemployment rate dropped to 8.3% last month from 8.5% in December.
The jobless rate has fallen every month since August, when the rate was 9.1%. Most economists were expecting the January unemployment rate to tick higher or at best stay the same. The Labor Department also said there was a little more hiring momentum at the end of last year than previously thought.
Revised data Friday showed that employers added 157,000 jobs in November, compared to 100,000 initially estimated. Job growth in December was 203,000. For all the encouraging news, the report Friday said 12.8 million people remained unemployed – 43% of them for more than six months – and that another 8.2 million part-time workers couldn’t find full-time employment.
As might be expected, stock markets were booming on the news.
Consumer confidence takes a nose-dive
There are other signs that don’t fit the rosy scenario, and despite the official jobless rates, people who are looking for work say jobs are getting harder to find.
From Shobhana Chandra of Bloomberg:
Consumer confidence unexpectedly dropped in January and a gauge of business activity fell, underscoring forecasts that the U.S. economy will cool after expanding at the fastest pace since the second quarter 2010.
The New York-based Conference Board’s confidence index decreased to 61.1, lower than the most pessimistic forecast in a Bloomberg News survey of economists, from a revised 64.8 reading the prior month. The Institute for Supply Management-Chicago Inc. said its business barometer declined to 60.2 from 62.2 in December. Readings above 50 signal growth.
Employers aren’t hiring fast enough to drive bigger gains in wages and consumer spending, while higher gasoline prices are cutting into household budgets.
The share of consumers who said jobs are currently plentiful fell to 6.1 percent from 6.6 percent. Those who said jobs are hard to get increased to 43.5 percent, the highest in three months, from 41.6 percent.
The proportion expecting incomes to rise over the next six months dropped to 13.8 percent from 16.3 percent. Still, the percent of respondents expecting more jobs to become available in the next six months increased to 16.2 from 14 the previous month.
Home prices take yet another tumble
Case-Shiller’s the major source for data about U.S. home prices, and the latest numbers ahoiw that housing prices haven’t bottomed out:
Data through November 2011, released today by S&P Indices for its S&P/Case-Shiller1 Home Price Indices, the leading measure of U.S. home prices, showed declines of 1.3`% for both the 10- and 20-City Composites in November over October. For a second consecutive month, 19 of the 20 cities covered by the indices also saw home prices decrease. The 10- and 20-City Composites posted annual returns of -3.6% and -3.7% versus November 2010, respectively. These are worse than the -3.2% and -3.4% respective rates reported for October. In addition to both Composites, 13 of the 20 MSAs saw their annual returns decrease compared to October’s data. New York and Tampa saw no change in annual returns in November; while Charlotte, Cleveland, Denver, Minneapolis and Phoenix saw their annual rates improve. At -11.8% Atlanta continued to post the lowest annual return. Detroit and Washington DC were the only two cities to post positive annual returns of +3.8% and +0.5%, respectively, in November. While positive, both cities saw these annual rates fall versus October’s data.
Read the rest [pdf].
The bailout could continue through at least 2017
So you thought the bailout was over?
Well, guess again. Not only ain’t it over, it’s likely to continue for another half-decade.
From Alan Zibel of the Wall Street Journal:
The U.S. government’s rescue of the financial system could last for five more years as the Treasury Department unwinds its investments in hundreds of banks and other companies propped up in the aftermath of the 2008 financial crisis, a government watchdog said Thursday.
The Bush administration launched the financial rescue plan in the autumn of 2008 at the height of the financial crisis. At its launch, Congress authorized spending $700 billion on the bailout known as the Troubled Asset Relief Program, or TARP. The Treasury Department currently estimates that the final cost for TARP will be $68 billion.
As of the end of last year, about $414 billion had been spent through 13 programs, while $278 billion had been repaid and $51 billion was still available to be spent, according to a quarterly report to Congress by the special inspector general for the TARP program. The remaining institutions in the program include 455 banks and thrifts, plus insurer American International Group Inc., General Motors and Ally Financial Inc.
“TARP is not over,” said Christy Romero, the acting TARP special inspector general. “Some TARP programs last until 2017, and market volatility has slowed Treasury’s progress in unwinding its investments.”
Bernanke sounds yet another alarm
Yep, the Federal Reserve boss says the winds aren’t blowing the right way and he can’t figure out how to tack.
From Don Lee of the Los Angeles Times:
In what has become a familiar refrain from the chairman of the Federal Reserve, Ben S. Bernanke described the economic recovery Thursday as “frustratingly slow” and said that “significant headwinds” face consumers and the broader economy.
In his first public exchange with Congress this year, Bernanke told members of the House Budget Committee that while the economy has been improving recently — with consumer spending, manufacturing and job growth up in recent months — the outlook remains uncertain.
He said a big question is the ability of households to spend, given their stagnant incomes and wealth, tight credit access and historically low consumer sentiment. Consumer spending accounts for about 70% of U.S. economic activity.
Data suggest consumers pulled back a bit in December, and their future spending will depend largely on the job market, as Bernanke said Thursday. The government on Friday will report the latest unemployment rate and job numbers for January.
Kodak, a name that can’t afford to click
When you think “film,” you think Kodak, and when you think “movies,” you think film.
So it was a natural when the iconic company decided to shell out some big bucks to slap their name on the place when films are celebrated.
Only problem is that film isn’t selling in these digital daysd, and now Kodak says they don’t have the long green to keep their name on the venue wherfe they dish out those Oscars.
From Agence France-Presse:
The century-old photography trailblazer Eastman Kodak has filed a request to pull its name from the Los Angeles theater hosting the Oscars as part of bankruptcy proceedings launched last month.
The request filed at a New York bankruptcy court on Wednesday asks for the cancelation of a contract signed in 2001 with developer TrizecHahn Hollywood in which Kodak paid an annual sum to attach its name to the venue.
“The Debtors’ rejection of the Contract will represent a significant annual cost savings to the Debtors and their estate,” Kodak said in the filing.
“Accordingly, the Debtors submit that rejection of the Contract represents a sound exercise of their business judgment and should therefore be approved.” The Kodak Theater, inaugurated in November 2001 with seating for 3,332, has hosted the Academy Awards — Hollywood’s premiere prize gala — since 2002.
The contract provided for the theater — currently owned by the CIM group — to bear Kodak’s name for 20 years.
Another icon takes a financial hit
The brand in question?
The New York Times.
And the Grey Lady isn’t making what she used to, another victim of digital.
From Amy Chozick of the New York Times:
The New York Times Company reported on Thursday that its fourth-quarter profit declined 12.2 percent as rising subscription and digital advertising revenue at its largest newspapers could not offset the continued drop-off in print advertising.
Net income was $58.9 million, or 39 cents a share, compared with $67.1 million, or 44 cents a share, in the period a year earlier.
For the full year, the company reported a net loss of $39.7 million, or 27 cents a share, compared with a profit of $107.7 million, or 71 cents a share, in 2010.
Revenue for the fourth quarter declined 2.8 percent, to $643 million. For the year, revenue at the Times Company was $2.32 billion, down 2.9 percent. Operating profit fell 4.5 percent, to $106.7 million, for the quarter and dropped 75.8 percent, to $56.7 million, for the year.
And now for that trip across the pond. . .
Troika demands 25% Greek wage cut, Papdemos to go?
Demands for a severe wage cut for Greek workers have stalled bailout talks, and the bankster-installed prime minister is threatening to quit unless the political parties of his coalition sign on the dotted line.
From Kathimerini English in Athens:
Prime Minister Lucas Papademos is preparing for a make or break meeting with Greek political leaders and is said to be considering resigning if the three parties in his coalition government cannot agree on the set of reforms Greece should adopt so it can qualify for more loans.
Papademos is expected to meet PASOK’s George Papandreou, New Democracy’s Antonis Samaras and Giorgos Karatzaferis of the Popular Orthodox Rally (LAOS) on Saturday. The three politicians will have to agree on measures that will satisfy Greece’s lenders and pave the way for a new bailout.
However, a number of sticking points remain. One of the main issues on which the party leaders are finding it difficult to agree is the private sector wage reductions that are being demanded by the troika of the European Commission, European Central Bank and International Monetary Fund.
Sources told Kathimerini that the troika is demanding that the minimum wage of 751 euros per month (gross) be reduced and that labor costs in the private sector drop by 25 percent in a bid to help Greece regain competitiveness.
Labor unions and employers wrote to Papademos on Friday to inform him that they cannot agree on a wage cut.
A second story in the same edition of the Greek paper reports a stinging attasck on the austerity demands from the head of the Orthodox Church:
Archbishop Ieronymos, the head of the Church of Greece, has taken the rare step of writing to Prime Minister Lucas Papademos to express serious concerns about the effectiveness of the government’s fiscal policy and the effect it is having on Greek people.
In his letter, Ieronymos also raises doubts about the role of the European Commission, European Central Bank and International Monetary Fund – or troika – in the country and whether Greece should agree to further austerity measures to receive its next bailout, suggesting that they are “larger doses of a medicine that is proving deadly.”
Ieronymos expresses concern about the impact of the crisis, describing a rise in suicides, homelessness and unemployment and the desperate state that an increasing number of Greeks find themselves. He warned that this was creating a dangerous social situation.
“Greeks’ unprecedented patience is running out, fear is giving way to rage and the danger of a social explosion cannot be ignored any more, neither by those who give orders nor by those who execute their deadly recipes,” he wrote.
Britain sinks into second recession. Or not.
And the only way out, warns one of the country’s leading research institutions, is a resolution of the European debt crisis.
From the BBC:
The UK economy will enter recession in the first half of the year as households continue to cut back, an influential think tank has warned.
The National Institute of Economic and Social Research (Niesr) said the government should temporarily ease its spending cuts to promote growth.
It expects the economy to shrink 0.1% in 2012, but to grow 2.3% in 2013 if the eurozone debt crisis is resolved.
Niesr said, however, that deficit cuts had bolstered market confidence.
The UK is already close to another recession – defined as two consecutive quarters of economic contraction – after official figures in January showed that the economy shrank by 0.2% in the final three months of 2011.
In its UK and World Economy Forecast Niesr said: “We forecast a return to technical recession in the first half of this year, as households continue to retrench, credit conditions remain tight, and businesses are reluctant to invest given uncertainty about both domestic and foreign demand.”
But other analysts say things look better., and don’t expect a double dip.
The new word in Europa is exclusion
It’s a term that refers to the growing numbers who are finding themselves pushed out of the economy, as well as those in Eastern Europe who’ve never gotten into the game.
From María Antonia Sánchez-Vallejo of Madrid’s El País via a Prewssurop translation:
In the Eurostat statistics on poverty and exclusion the crisis is bringing countries like Portugal, Ireland, Greece and Spain closer to eastern European countries that recently joined the EU and to ever broader layers of the populations of stable states and model welfare states that have come down in the world, as in Iceland, due to the collapse of its banking system.
But the EU average on poverty has a high dispersion around the mean. Bulgaria (46.2%) and Romania (43.1%) are almost double the mean, according to Eurostat. At the other extreme are the Czech Republic (14%), the Netherlands (15.1%) and Sweden (15.9%). Spain is in the middle, at 23.4%. But being in the middle ground is to go unnoticed: for Spain the structural risk (in 2007, about 20%), the lack of social protection, and record unemployment (22.8%) all add up to a less than rosy future.
As social spending cuts amplify the effects of the crisis, the four social groups traditionally more exposed to poverty – children, the elderly, women, and immigrants, i.e., age, gender and ethnicity as factors that intensify poverty – are joined by a host of citizens not so easily labelled.
These are “people with a very precarious job, which makes it hard to make ends meet, and on top of that they have no support; people between 30 and 45, with or without family responsibilities, and getting no subsidies because they have some income. If they want to keep paying the mortgage, they’re forced to go back to their parents,” says Joan Subirats, of the Autonomous University of Barcelona. “The other sectors are more closely studied. These lower middle classes, however, have not been in the spotlight,” he adds.
The French are consuming less
In an economy where cash begins as bank-issued debt, economic growth isn’t merely a desideraturm, it’s an imperative. Otherwise, it’s impossible to pay all that interest.
This is especially true in France, where the government is forced by law to borrow from private banks.
But in the Hexagon, growth is increasingly elusive.
From Les Echos, via Google Translate:
Last year, consumption of French manufactured goods, food and energy fell by 0.5% on average. Even during the 2008-2009 recession, the decline was not as marked. If the total consumption should have a modest growth through the services is the main driver of the economy stalls. December was particularly bad (- 0.7%), raising fears of a difficult early 2012 against a backdrop of rising unemployment. Paradoxically, the government relies on the announcement of his social VAT to encourage the French to bring forward purchases before the increase in the rate in October.
Merkel goes a-beggin’ in Beijing
Fresh from her triumph in Brussels, German Chancellor headed to Beijing, hat in hand to plead for more Chinese cash to aid the Euro bailout.
And it looks like she’s making headqay.
With German Chancellor Angela Merkel in China seeking support for the ailing euro, Premier Wen Jiabao has said Beijing is considering upping its participation in the rescue funds aimed at resolving the European debt crisis.
However Wen did not make any explicit financial commitments for the European Financial Stability Facility (EFSF) or the European Stability Mechanism (ESM) that is expected to replace it.
The ESM, a 500-billion-euro permanent bailout fund that is due to become operational in July. The EFSF is a temporary fund that has been used to bail out Ireland and Portugal and will help in the second Greek package.
After meeting with Wen Merkel said China’s leaders feel Europe solve its problems itself and she agrees: “Since we have a common currency, all the member nations should do their homework properly, and move forward with their responsibilities to ensure they are more reliable members. On the other hand, all the members must help each other because a common currency means we need to make joint efforts to safeguard it.”
China has repeatedly said it supports a stable euro, and it is estimated it has about a quarter of its foreign exchange reserves in euro assets.
For more, see this Deutsche Welle story.
Europe readies financial firewall launch
The goal: Nearly $2 billion in spare change to handle the next debt debacle.
Europe could have a ‘super’ €1,500 billion ($1,969 billion) debt firewall by the summer under plans to combine three funds of €500 billion each. The Financial Times Deutschland reported on Tuesday that the plan was discussed at a meeting on the sidelines of the recent World Economic Forum in Davos attended by US Treasury Secretary Timothy Geithner, International Monetary Fund (IMF) chief Christine Lagarde, German Finance Minister Wolfgang Schäuble and his French counterpart Francois Baroin.
The proposal would see the current temporary bailout fund, the European Financial Stability Facility (EFSF), combined with, rather than replaced by, the permanent European Stability Mechanism (ESM). The third €500 billion chunk would be provided by the IMF. In return, euro-zone countries have already agreed to €150 billion in bilateral credit for the fund. The other €350 billion would come from across the world from countries such as Brazil and the UK. The US, however, would not participate — even though Geithner himself said in Davos that only an extremely large firewall would ensure financial security.
The massive fund will only become reality if Berlin agrees to it, and the IMF and the European Commission are hoping to secure Germany’s approval at the next EU summit at the beginning of March.
According to the newspaper, the timetable for putting into place what Lagarde called a “clear, simple firewall” is a short one. The second aid package for Greece and the debt rescheduling agreement with private creditors should be agreed in the next week or two, and G20 finance ministers can then discuss the fund issue at their summit in Mexico at the end of February to once again put pressure on the euro zone to put up more money.
Lagarde is hoping that the super-fund will never need to be used once it is in place, especially as the European Central Bank should be waiting in the wings to provide more liquidity into the financial sector.
One good European investment: Lock boxes
Seems that so many Europeans are looking for a safe place to stash their valuables “just in case” that there’s a major run on safety deposit boxes in that traditional safe haven high in the Alps. And now there’s a run on boxes in Italian cities right next to the Swiss border.
From Golem XIV:
Back in June of last year (2011) I wrote about how there was such a demand for safe deposit boxes in Switzerland that,
…if you want a bank box in Zurich today, they will require that you have a minum of half a million swiss francs on deposit in the bank, before they will even consider you. That is how short of space they are.
The same person who told me that contacted me today to tell me that the demand for Safe deposit boxes has grown so hugely that in the area bordering Italy, hotels are now renting out their own safety deposit boxes.
First the Greeks now the Italians. Capital Flight in full effect. But don’t worry I am sure Mr Monti has it all under control.
Europe’s banks just won’t lend
So, if there’s a recovery, why are Europe’s banks hoarding their growing cash reserves instead of lending?
And what will happen if they don’t loosen their pursestrings?
Jasck Ewing ponders the problems for the New York Times:
Banks in the euro area cut lending sharply at the end of 2011, according to data published Wednesday, raising concern that Europe was on the verge of a credit crisis that could lead to a deeper recession than expected.
A quarterly survey of commercial banks by the European Central Bank showed a surge in the number of institutions that were becoming more restrictive about who they lent to, because the banks themselves were having trouble raising money and were under pressure from regulators to reduce risk.
The survey, which covered the last three months of 2011, provided more evidence of the harmful effect that the sovereign debt crisis was having on the banking system. It also somewhat validated the European Central Bank policy of providing big emergency loans to euro area banks in an attempt to stave off a full-blown lending drought.
“A credit crunch would tip the euro zone back into a severe recession,” Marie Diron, an economist who advises the consulting firm Ernst & Young, said in a statement.
There is also evidence that the problems in Western Europe are spilling over into the developing economies of Eastern Europe.
For example, lending to Poland from outside the country fell by $12 billion, the Bank for International Settlements in Basel, Switzerland, reported last week. The decline is surprising because Poland’s economy continues to grow briskly. It suggests that hard-pressed West European banks have started withholding resources from their subsidiaries in Eastern Europe.
A public sector walkout fizzles in Portugal
General strikes have been the order of the day in Europe, most recently in Italy in Belgium.
Another strike held this week turned out to be something of a dud. The reason: Workers were too fearful of losing their jobs to participate.
From Axel Bugge of Reuters:
The trains ran and the buses, too. Staff made it to work and shops and banks opened across Lisbon. Weak backing for a transport strike on Thursday reflected a broader lack of appetite for militant action by workers concerned for jobs threatened by Portugal’s growing debt crisis.
Already facing its worst hardship in decades, Portugal has come under increasing pressure over the last month on fears it will be forced to seek another bailout beyond its current 78-billion-euro lifeline or restructure its debts like Greece. Italian, Irish and Spanish bonds rally, but Portugal’s remain mired in doubt Lisbon can handle its debt.
Government austerity measures are biting. Unemployment is above 12 percent and expected to rise further in the poorest country in western Europe. However, the strike appeared to have little impact.
Trains and buses were running. Only Lisbon’s metro and ferries shut down.
“They are raising the prices and now there is a strike as well, this is annoying,” said Rosario Mendes, a janitor waiting for a bus to return home from her early shift. “We can’t go on strike, there are no jobs.”
Shops and commerce was functioning normally in Lisbon.
Even union officials acknowledged the strike was weak.
Monti plans to shove new regs down labor’s throat
The unions aren’t happy, either — especially with the proposal to scrap regulations that ban firing without cause.
But Mario Monti says the changes will come, one way or another
From Lorenzo Totaro and Chiara Vasarri of Bloomberg:
The Italian government will push ahead this month with a plan to overhaul labor-market rules even if it fails to win the backing of unions and employers, Labor Minister Elsa Fornero said.
Fornero told union leaders and employers at a meeting in Rome today that Prime Minister Mario Monti’s government will approve the new rules with or without their support and that negotiations need to be concluded within three weeks, according to two union officials at the talks. The government should be more “cautious” in its rhetoric, CISL union leader Raffaele Bonanni told reporters in Rome after Fornero’s comments.
Employers and unions remain divided on how to spur hiring in an economy where youth unemployment tops 30 percent. Changing labor laws to make them it easier for companies to shed workers can’t be “taboo,” Monti said last night in an interview on Canale 5’s “Matrix” show.
The code in the labor law known as Article 18 that bans firing without just cause and forces employers to rehire and compensate workers deemed to be unjustly released, “can be pernicious in some circumstances,” Monti said. Unions oppose any attempts to weaken Article 18.
And in India, a worker revolt ends with a killing
The issues in questions were precisely the same ones under fire in Italy: Wrongful termination and the rehiring of wrongfully terminated employees.
From Kenneth Rapoza of Forbes:
Workers at the Regency Ceramics factory in India raided the home of their boss, and beat him senseless with lead pipes after a wage dispute turned ugly.
The workers were enraged enough to kill Regency’s president K. C. Chandrashekhar after their union leader, M. Murali Mohan, was killed by baton-wielding riot police on Thursday. The labor violence occurred in Yanam, a small city in Andra Pradesh state on India’s east coast. Police were called to the factory by management to quell a labor dispute. The workers had been calling for higher pay and reinstatement of previously laid off workers since October. Murali was fired a few hours after the police left the factory.
The next morning, at 06:00 on Friday, Murali went to the factory along with some workers and tried to obstruct the morning shift, local media reported. Long batons, known as lathis in India, were used by police who charged the workers, injuring at least 20 of them, including Murali. He died on the way to hospital, according to The Times of India. Hundreds of workers gathered outside the police station and demanded that officers be charged with homicide.
Curfew and other civil orders were imposed in Yanam because of the uprising that ultimately lead to the murder of the Regency president a few hours after being attacked with led pipes. Police reported that rioters also torched several vehicles outside the police station. Eight Regency Ceramics workers were injured in police firing that followed; the condition of two of them is critical. More than 100 protesters have been arrested.
India’s factory workers are the lowest paid within the big four emerging markets. Per capita income in India is under $4,000 a year, making it the poorest country in the BRICs despite its relatively booming economy.