High Unemployment Stalls Spanish Economic Recovery
Madrid, Spain (AHN) – Spain’s weak economic recovery stalled in the third quarter, according to data from Spain’s National Statistics Institute.
Preliminary figures for the gross domestic product (GDP) from July to September shows it unchanged from Q2. In addition, GDP for the year was only up 0.2 percent over the past year.
The National Statistics Institute says the slowdown was indicative of a lower national income. That is hardly surprising given Spain’s 20 percent unemployment rate. High unemployment has resulted in lower consumption and less consumer spending has led to little growth in the economy.
However, healthy exports meant the news was better than analysts had expected.
Spain has instituted austerity measures to try to curb the government budget deficit. However, one of the measures, wage cuts of 5 percent for government workers, will likely result in further weakening consumer spending as government workers will have less money to spend.
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Obama welcomes progress in forming Iraq government
US President Barack Obama welcomes the progress Iraq has made in forming a new “inclusive” government, the White House said on Thursday.
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Pressure piles on Greece to harden fiscal measures
Greece’s budget problems are far from over, as its deficit is likely to have narrowed much less sharply than the Government had predicted, Capital Economics said in a note. “Greece will now come under heavy pressure to implement an even more draconian fiscal squeeze,” Ben May, a European economist with Capital Economics, said.
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Irish bailout rumours hit markets
Long-term Irish interest rates soar as austerity cuts seem to have failed to convince international investors
Fears that Ireland could be forced into a Greek-style bailout by the European Union or the International Monetary Fund swept through financial markets today after the beleaguered country’s borrowing costs soared to levels seen as unsustainable by investors.
Long-term Irish interest rates surged to their highest levels since the launch of the single currency amid growing evidence that repeated bouts of budget austerity have failed to convince international investors that the former Celtic Tiger economy can cope with the banking crisis caused by a boom-and-bust in its housing market.
Attempts by Patrick Honohan, the central bank governor, to reassure investors by stressing that the Irish government was already planning the tough fiscal measures the IMF would insist upon backfired and helped push yields on 10-year Irish bonds up by 61 basis points to 8.7%.
“Putting Ireland and the IMF in the same sentence can trigger palpitations in the credit markets,” said Gavan Nolan, a credit analyst at Markit. “Speculation that the Irish government and the IMF have already reached an agreement was doing the rounds.”
The premium that investors demand to buy Irish bonds over the rock-solid German bunds also soared to an all-time high of 615 basis points, or 6.15 percentage points. Panic about Ireland spread to Portugal, whose benchmark 10-year bond yield jumped 30 basis points to 7.2%.
“There will have to be a bailout of some sort in the end, for Ireland and Portugal,” said Ashok Shah, chief investment officer at London & Capital. “The cost of capital is becoming just too much, and the debt levels are already too high. The prospects of deficit reductions mean the economies will probably contract, so cash flows will be more difficult to get. These countries will have to borrow to meet interest payments, that is an unsustainable position to be in. Before they get into this, a solution needs to be found, mainly, going into the stabilisation funds.”
Taoiseach Brian Cowen’s unpopular government has pledged to outline a four-year plan later this month to bring the ballooning budget deficit under control, and to push through €6bn (£5.13bn) in savings in the 2011 budget on 7 December. But financial markets have become concerned both at the government’s wafer-thin majority and the deflationary impact of further tax increases and spending cuts on growth.
bond sell-off was partially triggered by LCH.Clearnet, a London-based clearing house, which made it more expensive to trade Irish bonds amid concerns of a potential debt restructuring.
For months, bondholders have been worried about Ireland’s capacity to pay its deficit, the product of a debt-fuelled decade that ended up with the recent property collapse. Several announcements of drastic budget cuts this year have not been enough to convince the so-called bond vigilantesthat the country would be able to meet its interest payments.
“I don’t see what else they can do, after a certain point, this becomes self-reinforcing – it’s hard to see … those bond yields coming down,” said a fund manager who wanted to remain anonymous. “Ireland has announced various rounds of fiscal tightening and it hasn’t worked, it looks as if investors are just getting out. Once it blows out like this, you see people cutting losses. What can the government do? It looks as if they are going to have to access support.”
Earlier this year, bond investors sold Greek bonds on concerns the government would not be able to pay their debts. The sales lifted borrowing costs to impossible levels, forcing the country into an IMF and EU bailout. To avoid a similar scenario, the EU announced an €750bn emergency fund that countries could access if the markets turned their backs on them, by charging too much interest. “The IMF or the EU are not only providers of funds, but external arbiters that give you credibility, the endorsement,” the fund manager said.
Investors say the Irish situation is unsustainable, despite the government having no immediate need to raise funds. “Irish private sector companies wouldn’t be able to raise money abroad, the government could also suffer a big downgrade, and panic would spread to other countries, such as Portugal,” the fund manager added.
Greece and Portugal have made significant efforts to attract Chinese investors to stabilise their debt markets and to inject cash into their ailing economies. Asked if he would allow Chinese ownership of Irish banks, Honohan said he is “too much an internationalist to say no to that”. Ireland European monetary union IMF Europe Financial crisis Global recession Banking European Union Economics Portugal Greece Elena Moya Larry Elliott guardian.co.uk © Guardian News & Media Limited 2010 | Use of this content is subject to our Terms & Conditions | More Feeds
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Spending Cuts Reach Campus Oasis
Looming cuts in government spending threaten to damp the prosperity of the Palouse region in Idaho and Washington State, where two public universities have helped keep the economy strong.
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Cameron Pushes Through With 2 New Royal Navy Aircraft Carrier Projects
London, England, United Kingdom (AHN) – British Prime Minister David Cameron gave the go ahead for the Royal Navy to push through with two new aircraft carriers the British government ordered from BAE Systems.
Cameron decided to move forward after he received notice from BAE System Chief Executive Ian King that cancelation of the orders would cost more taxpayers’ money and jobs.
King explained that if the two carriers are delivered, the total cost would reach $7.875 billion (5.25 billion pounds), while if only one would be made, the cost would be lowered to only $7.2 billion (4.8 billion pounds).
Ministers and defense officials were pushing for the cancelation of the second carrier, The Prince of Wales. The orders were made by the previous Labor-led government.
King warned that if one of the orders were canceled, BAE would shutter three shipyards by early 2013 and cause the loss of over 5,000 jobs in BAE alone and thousands more in companies that are part of BAE’s supply chain.
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NJ: N.J. to repay federal government $350M spent on killed Hudson River tunnel project
Gov. Chris Christie cut New Jersey off from $5 billion in New York-based salaries and diminished its future role in the world’s second-largest regional economy when he stopped construction of a Hudson River rail tunnel he said taxpayers couldn’t afford.
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Egypt Plagued by Lack of Statistics Data
Cairo, Egypt (TML) – How many Egyptians are there? Do they have enough hospitals and doctors to serve them? How many kilometers of paved roads cover the country? How many children will start school next year?
National statistics are the foundation of government policy and planning. But the quality of Egypt’s statistical data is so poor that officials are in many cases driving blindfolded, a government think tank says.
“Information Gaps in Egyptian Statistics and the Quality of Basic Data,” a report released by the Egyptian Cabinet Information and Decision Support Center (IDSC), argues that policy makers are unable to use locally published data to analyze and devise social and economic policies.
“We asked researchers, businessmen and decision makers whether the information they receive suits their needs,” Muhammad Ramadan, executive director of IDSC, told The Media Line. “The producers of statistics always say there is no problem, but clearly there is.”
Egypt is ruled by a sprawling bureaucracy organized in 37 ministries and scores more agencies, but the armies of officials often ail to deliver on basic services. The World Economic Forum annual competitiveness report ranks Egypt 79th among 139 countries worldwide for excessive regulation and 68th for government transparency.
The report’s authors questioned 51 local experts in fields such as economics, management and statistics working in both the private and government sectors. It was the first time anyone questioned the users of statistical information, rather than the people who produce them.
The experts criticized not only the low quality of available data, but also the legal and bureaucratic difficulties in obtaining official information.
The information gap in Egypt runs very deep indeed. According to the report, no reliable data exist on Egypt’s population; with some government studies claiming there are as few as 80 million and others estimating it at 85 million. The World Bank, for instance, claims that Egypt’s population is 83 million, while the United Nations World Health Organization puts it at just under 77 million.
The Egyptian health sector seems to be a statistical black hole. No reliable information exists on the spread of disease throughout the country, on the prevalence of public health risks such as AIDS, or the effectiveness of government-funded health services, the report notes.
In many cases, experts must rely on data provided by international organizations such as the UN, since official Egyptian statistics are often kept from the public on national security grounds. Sometimes, government clerks demand exorbitant amounts of money for disclosing information, the report said.
“We believe in evidence-based policy making,” Muhammad Ramadan the Media Line. “Without reliable information, it is impossible to make good decisions.”
The new report revealed three major information deficiencies: it is often out of date, its quality is low and the public has limited access to it.
“We should treat information production as any other industry,” Ramadan said. “The number of companies producing statistics in Egypt is very small. Government should encourage the private sector and universities to produce more statistics.”
Walid Kazziha, a political scientist at the American University in Cairo, said he wasn’t surprised by the finding, which he said indicated a deep-rooted cultural problem.
“Egyptian society is in a deep crisis,” Kazziha told The Media Line. “Having a government without statistics means we could end up with a semi-failed state.”
Kazziha said government policies were often flawed, not only because of bad data but also because people don’t provide reliable information to government survey takers. He added that Egyptians didn’t give much weight to statistical information.
“People need to become more responsible,” he said. “They need a sense of purpose and more satisfaction with their job. We don’t have this in Egypt right now.”
However, not all sectors in Egypt suffered from information deficiency, Kazziha said.
“The security apparatus seams to be very aware and alert,” he said. “I don’t think we’re going to have a 9/11 in Egypt.”
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Economy, abortion, God drive debate in Brazil vote
The pocketbook is battling the pulpit in Brazil’s presidential elections Sunday, as government candidate Dilma Rousseff faces opposition leader José Serra in a runoff to lead this burgeoning economic power of 190 million people.
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Final Decision on Bulgaria Pension System Delayed
Bulgaria’s government is expected to announce on Friday whether it will proceed with plans to transfer the pension accounts in nine private funds with total assets of about BGN 500 M to the state in a bid to solve its fiscal woes. The decision was initially due on Wednesday, but was delayed due to the additional information that employers had to provide. The proposal has proved highly controversial in Bulgaria and critics, including analysts and business groups, fear that if the bill passes, the mandatory general pension funds, whose assets are worth BGN 2….
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