This week, RGE tracked a series of events that revealed the Obama administration’s juggling act: an effort to maintain growth, tame the fiscal deficit and garner the congressional support needed to implement policy. Democrats’ loss of the Massachusetts Senate seat raised questions about President Obama’s ability to take forward reforms on financial regulation, fiscal austerity and health care

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RGE’s Wednesday Note – Obama’s Recent Regulatory and Fiscal Proposals

February 3, 2010 Recovery Hampered by Peg to Euro For Immediate Release: February 3, 2010 Contact : Dan Beeton, 202-256-6116; 202-239-1460 WASHINGTON, DC – The Latvian economy has suffered the worst two-year decline in output on record and will have trouble recovering with its currency tied to the euro, according to a new report from the Center for Economic and Policy Research.

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Fixed Exchange Rate Has Produced World’s Worst Recession In Latvia, Says New CEPR Report

Its nearly 18 months since the US government nationalised the 2 home loan giants, Fannie Mae and Freddie Mac, at the start of the September 2008 financial crisis. Today, their current obligations amount to $3.7trn – larger that the total UK economy. And the Wall Street Journal notes that their cumulative losses on home loans had reached $291bn by the end of 2009

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No news on Obama’s plans for Fannie and Freddie

Today’s Daily Angle comes from  Wikinvest Wire member  Yves Smith of Naked Capitalism . You can read  the full article on NakedCapitalism.com As readers may know, the financial reforms proposed by the  Obama administration barely deserve the name. The late-in-the-game efforts to rebrand the effort by putting  Paul Volcker in the forefront and patch up one of the gaping holes, that the government is backstopping risky trading businesses ( Goldman Sachs has issued  FDIC guaranteed bonds) illustrates the typical Obama chasm between rhetoric and action

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FDIC Proposes Tough-Minded Securitization Reforms; Industry Howls

by Edward Hugh: Barcelona José Luis Rodríguez Zapatero, Spain’s prime minister, said in Davos this week : “We are a serious country and we will fulfil our promises.” With these words Spain’s Prime Minister sought, during his visit to Davos last week to reassure international investors that Spain, despite the severity of the recession it is currently suffering, and the major challenges facing its banking system, is not about to become another Greece. Just to prove the point he had Labour Minister Celestino Corbacho and Economy Minister Elena Salgado announce in short order that a) Spanish citizens are going to work two more years each in the longer term, and b) face continuing and sweeping cuts in services and increases in taxes in the short term

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Spain Is A Serious Country

From the Fed: The January 2009 Senior Loan Officer Opinion Survey on Bank Lending Practices The January survey indicated that commercial banks generally ceased tightening standards on many loan types in the fourth quarter of last year but have yet to unwind the considerable tightening that has occurred over the past two years. The net percentages of banks reporting tighter loan terms continued to trend lower. Banks reported that loan demand from both businesses and households weakened further , on net, over the survey period

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Fed: Banks Cease Tightening Standards, Loan Demand Weakens Further

Dean Baker TPM Café, February 1, 2010 Truthout, February 1, 2010 See article on original website Our political leaders continually assert that we should be thanking them that we are not in a second Great Depression rather than complaining about how bad things are. The second Great Depression theme came up repeatedly in the debate over the reappointment of Federal Reserve Board Chairman Ben Bernanke. It also featured prominently in Treasury Secretary Timothy Geithner’s defense of his handling of the AIG bailout.

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The Second Great Depression Bogeyman

I’m constantly asked “What can I do to improve my bottom line”? There are several ways to see improvement in your profits; none of which include cutting costs! We’ve all heard you have spend money to make money right? Target, Walmart, etc have not cut their advertising costs and as a matter of fact during a recent outing to the mall I saw many Help Wanted signs in the windows so payroll should be improving in our area as well.

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Marketing is important in business growth

Dean Baker The Guardian Unlimited , February 1, 2010 See article on original website It is probably best to leave the gods out of discussions of economic policy, but this barrier was breached last month when Goldman Sachs CEO, Lloyd Blankfein, told an interviewer that Goldman Sachs was doing God’s work. Most people will never have the opportunity to join Goldman Sachs’ gang of multi-millionaire bankers. However, by Mr.

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Walk Away: It is God’s Work

Has the Chicago area lost its mojo? Given the poor economic conditions pervading so many regions of the United States, Chicagoans are not alone in asking whether their path of growth and development has gone off track. When the nation’s economy as a whole is down, it is especially difficult for individual regions to interpret economic signals concerning their long-term performance, but the tendency is to read them negatively.

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Groundhog Day for Chicago’s Economy?

When the NAMA bill was being debated in the Dail last Autumn, the public was regularly told that the plan was to have the first tranche of loans transferred by the end of last year. Today’s Sunday Business Post reports that further delays are now expected due to delays in preparations at the banks and due to the absence of clearance from the European Commission. The story reports that a verdict from the Commission may not come until the end of February at the earliest

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Further Delays on NAMA

The above chart, based on data from the excellent weekly American Chemistry Council report, highlights the changes in chemical production over the past year. November saw world production (black line) finally turn positive again versus the previous 12 months, for the first time since August 2008. For an industry used to steady growth in line with GDP, the past 15 months have been traumatic

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Global chemical output returns to growth

By Edward Hugh: Barcelona Sometimes I am surprised by what some people consider to be news. Tony Barber points out today in the FT Brussels blog that the EU has the power to mount bailouts of any member country under “exceptional circumstances”

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The EU Does Have The Legal Power To Organise Bailouts

Dean Baker Sacramento Bee , January 30, 2010 See article on original website Deceptive mortgages helped feed the housing bubble whose collapse wrecked the economy. Ten percent unemployment and 20 million homeowners underwater might seem a good reason to impose tighter standards on mortgages and other loans

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Consumer Protection Agency Would Stop Economy-Gutting ‘Bubbles’

by Edward Hugh: Barcelona Well, the Spanish government are due to announce their 2009 fiscal deficit number this morning, together with their adjustment plan for reducing the annual fiscal deficit to below 3% of GDP by 2013. This rather distasteful news will be presented to the Spanish people later in the same day on which they opened their morning newspapers to discover that they were all going to have to work two years longer – no crisis comes free – since the Labour Minister Celestino Corbacho has announced that the retirement age will be raised from 65 to 67 (in two-month-per-year installments) between now and 2025.

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After Greece, and Portugal, Does Spain Come Next?

by Edward Hugh:Barcelona Well there certainly is a lot happening out there at the moment. And Monday’s successful bond sale which left the Greek government triumphally proclaiming they could comfortably meet their 2010 borrowing program now seems to belong to a lifetime ago

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Rumours, Rumours, But No Greek Bond Sales To China

The ESRI’s Quarterly Economic Commentary (QEC) by Alan Barrett, Ide Kearney, Jean Goggin and Thomas Conefrey, published in December, is now available to download free of charge from the ESRI’s web site here . This QEC contained a number of pieces of research which may be of general interest

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The ESRI’s Quarterly Economic Commentary

Dan Beeton Newmatilda.com (Australia), January 26, 2010 En español See article on original website Debt, Aid, Foreign Interference and the Most-Impoverished Country in the Western Hemisphere The recent earthquake in Haiti has brought the island nation a perhaps unprecedented level of attention, interest, generosity and solidarity. The magnitude of the earthquake’s human toll has prompted international shock and an examination of the factors behind why the quake was so much more devastating in Haiti than similar quakes have been in other parts of the world. It is foreign interference – economic, military and covert – that has been the principle reason why Haiti is the most impoverished country in the Western Hemisphere, and in turn why the toll of the Jan.

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Haiti’s 200-Year Economic Earthquake

CNN Money — At the World Economic Forum, economist Nouriel Roubini warns about pitfalls to the economy and calls for more regulation. (Click for Video ) [5:13]   _____________________________________________________ Forbes.com — Davos: Roubini Predictions (Click for Video ) [3:14]    _____________________________________________________ CNBC — Asset Bubble is Beginning Now (Click for Video and Report ) [8:04]   ____________________________________________________ Bloomberg — Roubini Pessimistic on Euro Area, Calls Spain a Risk (Click for Video and Report )

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Roubini CNN Money, Forbes.com, CNBC, and Bloomberg Interviews at Davos

With Professor Roubini’s comments on sovereign risk in Davos receiving widespread attention today, we would like to call your attention to three Roubini.com pieces provided to our clients over the past three weeks on sovereign debt and, in particular, the fiscal deterioration of certain eurozone countries (“the PIIGS.”)

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RGE on Sovereign Risk

Newsweek Video — In preparation for President Obama’s first State of the Union address, Nouriel Roubini gives his perspective of what economic challenges we’ll face this year and answers CitizenTube users’ questions on the financial crisis. (Click for Video ) [7:03]  

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Nouriel Roubini on the 2010 Economy: NEWSWEEK & YouTube

After the leak of emails from the University of East Anglia showed global warming advocates apparently manipulating data and blackballing dissenting voices, now comes perhaps an even bigger scandal. This time, the discovery of serious scientific errors and accusations of conflicts of interests center on what was considered the gold standard of climate science: the Intergovernmental Panel on Climate Change (IPCC) and its chair Rajendra Pachauri.

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IPCC reform, now

The S&P downgrades make for depressing reading. I really don’t want to beat the drum again about the government over-promising in relation to what the establishment of a NAMA could deliver. Still, it’s interesting to note that the basic problems afflicting the Irish banks—loan losses, weak operating income and concerns that the banks will be undercapitalised—are pretty much the same as they were this time last year.

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Resolutions and Bondholders, Again

Standard and Poor’s have again downgraded the Irish banks. The Irish Times story about this is here . The S&P Press releases are here (need to sign up but it’s free.) The reasons for the downgrade of AIB are summarised as follows: “The negative outlook reflects our view that the quantum and timing of equity raised through recapitalization may not be sufficient to support an ‘A-’   rating, combined with our expectation of significant losses from the remaining loan book and weak operating income as a result of the challenging economic environment,” said Ms.

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S&P Downgrade Irish Banks Again

Reuters notes : U.S. securities regulators originally treated the New York Federal Reserve’s bid to keep secret many of the details of the American International Group bailout like a request to protect matters of national security , according to emails obtained by Reuters. The national security claim may seem outlandish, but it is nothing new

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Why is National Security Being Invoked to Keep Basic Financial Information Secret?

Twitter and travelling in China do not go well together (sadly), so apologies for the delayed news here on the blog. Our round-up of news from ChinaBlogTweets is below, but the staqnd-out stories must be the throwing down of Google’s gauntlet, and China’s year-end figures that include not only great growth, but also several more “biggest” and “second biggest” nominations. Google, censorship and business sense?: This is such a big story, it needs to be looked at from several perspectives

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Briefly…Top Ten Tweets (From Google’s Searching Questions, To Poorly Made Books, Bubbles & Biggest Things)

Dean Baker The Guardian Unlimited , January 25, 2010 See article on original website The Senate’s decision on approving Ben Bernanke for a second term as chair of the Federal Reserve Board is coming down to the wire and the Wall Street crew is once again pulling out all the stops. To get the 60 votes they need for Senate approval they are reaching into the treasure chest of tall tales they used to push through the TARP. They are once again telling the American people that the world will end if we don’t do exactly what they want.

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Reappointing Bernanke: We Won’t Get Tarped Again

Today’s Daily Angle comes from Horacio R.

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Buy, Sell or Hold: General Mills Stock Has Shown Its Short-Term Value and Is Still a Long-Term Winner

Jan. 25 (Bloomberg) — Bloomberg’s Susan Li reports on the outlook for Asian economic growth and central banks’ monetary policies. (Source: Bloomberg)

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Asian Economies to Head Monetary Policy Tightening: Video

Sunday ’s Newslinks brought to you by At Ease Tees   4 More Malaysian Churches Attacked; 1 Vandalized Three more churches in Malaysia were targets of arson Sunday and another was vandalized in the latest wave of attacks on the country’s Christian minority.   Ugandan Lawmaker Refuses to Withdraw Anti-Homosexuality Bill Aid Groups Urge Int’l Community to Help Sudan Keep the Peace Prison Fellowship: High Rape Rate of Juveniles Unacceptable Anglican Leader Calls for ‘Tougher Church’ Southern Baptist President’s Surgery Went ‘Great,’ Says Family Tens of Thousands Sign Petition Urging Holder to Move KSM Trial from New York (CNSNews.com) – More than 60,000 people, including members of Congress and three former presidential candidates, have signed a petition calling on Attorney General Eric Holder to move the trial of Khalid Shiekh Mohammed (or KSM) from New York City to a military tribunal

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Sunday’s Newslinks 01/24/10