Bloomberg:
- Merkel Bloc May Lack Majority for EFSF Bill, Handelsblatt Says. German Chancellor Angela Merkel’s ruling bloc of Christian Democrats and Free Democrats may lack a majority to secure passage of a bill to expand the euro’s temporary rescue fund, the Handelsblatt reported. As many as 23 coalition lawmakers may reject the bill that’s due in parliament next month, said the newspaper, without citing names. That underscores her dependence on the oppostion to ensure ratification. To gain passage of the bill on the coalition’s own strength, Merkel needs 311 votes in favor of the changes among the 620 lawmakers sitting in parliament’s lower chamber in Berlin. Her bloc comprises 330 lawmakers, implying that the German chancellor may lack 4 votes to achieve a coalition majority if 23 vote against the bill, Handelsblatt said. Euro-region leaders have pressed parliaments to secure fast-track approval to revamp the fund, called the European Financial Stability Facility, relieving or partly relieving the European Central Bank’s emergency debt purchase program.
- Consumer Spending in U.S. Climbs More Than Forecast on Purchases of Autos. Consumer spending climbed more than forecast in July as Americans dipped into savings to buy cars and cool their homes, showing the biggest part of the economy is holding up. Purchases rose 0.8 percent, the biggest gain since February, after a 0.1 percent decline the prior month, Commerce Department figures showed today in Washington. Incomes grew 0.3 percent and the savings rate dropped to a four-month low.
- Pending Sales of Previously Owned U.S. Homes Decline More Than Estimated. The number of contracts to purchase previously owned U.S. homes fell in July for the first time in three months, a sign that lower prices and borrowing costs aren’t luring in buyers. The 1.3 percent decrease in the index of pending home sales followed a 2.4 percent gain the previous month, the National Association of Realtors said today in Washington. Economists forecast a 1 percent drop, according to the median of 40 estimates in a Bloomberg News survey.
- Copper Falls in New York on Concern Global Economic Recovery Is Faltering. Copper fell for the first time in five sessions on concern that the global economic recovery is faltering. World economic expansion will slow to 3 percent this year from 4.2 percent in 2010, and growth will remain subdued until 2015, the Centre for Economics and Business Research said today in an e-mailed statement. Before today, copper fell 8.1 percent in August, heading for the biggest monthly drop since January 2010, amid escalating debt woes in Europe and the U.S. Copper futures for December delivery fell 1.95 cents, or 0.5 percent, to $4.098 a pound at 9:54 a.m. on the Comex in New York.
- Floods Still Threaten as Recovery Begins. Vermont towns battled floods of historic proportions, utility crews struggled to restore power to five million people along the East Coast, and big-city commuters coped with transit-system disruptions Monday as the rainy remnants of Hurricane Irene finally spun into Canada.
- Noda Gets The Nod. Japan is getting another new prime minister this week, with Yoshihiko Noda's victory in yesterday's Democratic Party of Japan leadership race setting him up to take the top job as early as today. He becomes the country's sixth leader in five years, and cynics are already betting he'll be a one-year wonder like his four immediate predecessors. That cynicism may well be justified, though the leadership race has brought a few glimmers of hope.
- Hungary Sees a Decade of Euro Zone Turmoil. The euro will be under permanent stress for up to a decade as a result of the sovereign debt concerns of some of its members, Hungary’s prime minister said Monday, pledging he’ll prepare his country for the tumultuous time ahead. “Hungary must prepare for a scenario in which the … economic crisis won’t pass in few months. There are analyses that show it won’t pass in the coming few years, either,” Viktor Orban said.
- GOP to Target Regulations in Fall Push to Spur Hiring. The House Republican agenda this fall will focus on repealing environmental and labor regulations that GOP lawmakers say are driving up the cost of doing business and discouraging employers from hiring new workers.
- Is Europe Weighing TARP Program to Bailout Big Banks?
- Hurricane Katia Is Now Forming Over The Atlantic.
- ECRI's Achuthan: "It's Too Late for Obama to Create Jobs'.
- SocGen: "Commodity Prices Seem Much Too High".
- "Beijing Is A Nightmare": Ai Weiwei Denouces Beijing In Controversial Editorial.
- NYSE Short Interest Soars By Most Since March 2009 S&P Lows, Highest Shorting Since June 2010. (graphs)
- CMBS Sell Off Continues, Super Dupers Hit Widest Spread Since June 2010. (graph)
- Dallas Fed Survey Respondents' Gloom Soars.
- Bank of America Sells Stake in China Construction Bank. Bank of America announced on Monday that it would offload about half of its China Construction Bank holdings to a group of unidentified investors, in a deal expected to raise $8.3 billion.
- IMF Cuts US, Euro Zone Growth Forecasts For 2011, 2012 - Report. The International Monetary Fund has cut its 2011-2012 growth forecasts for the U.S. and the 17-nation euro zone and says central banks in both should be prepared to ease monetary policy, Italian news agency ANSA reported Monday, citing an IMF draft report. The fund lowered its forecast for expansion of U.S. gross domestic product this year to 1.6% from a 2.5% view issued in June, and lowered its outlook for next year to 2% from 2.7%, ANSA reported. The IMF cut its euro zone 2011 growth forecast to 1.9% from 2% and the 2012 view to 1.4% from 1.7%, according to the report.
- WSJ: Union Warns of Saab Bankruptcy Over Unpaid Wages. Swedish automaker Saab Automobile AB (SAAB-B,0GWL.L: News ) could be forced into bankruptcy if fails to pay wages by the end of this week, the Wall Street Journal reported Monday, citing one of the company's labor unions, IF Metall. Saab Automobile is owned by Dutch automaker Swedish Automobile N.V.
- Voters Express Stronger Enthusiasm for Health Care Repeal. The latest Rasmussen Reports national telephone survey of Likely U.S. Voters shows that 57% at least somewhat favor repeal of the health care law, including 46% who Strongly Favor repeal. Thirty-seven percent (37%) at least somewhat oppose repeal, with 25% who are Strongly Opposed.
- EU Official: Market Turmoil Threatens Recovery. Turmoil in global financial markets threatens the economic recovery in the European Union, the bloc's top economic official said Monday. The warning from EU Monetary Affairs Commissioner Olli Rehn came after a turbulent summer for markets across the globe, as investors worried about a potential new recession in the United States, the eurozone's ability to resolve its debt crisis and the health of European banks. "The financial markets and the real economy move now more in synchrony, which makes me seriously concerned about continued financial turbulence spilling over to and potentially harming the recovery of the real economy," Rehn told European lawmakers. That statement is a sharp turnaround from comments in recent months, when Rehn consistently pointed out that growth in the EU was strengthening despite the market jitters. As a result, the European Commission now has a somewhat bleaker view of economic growth in Europe than this spring, Rehn said, adding that a new forecast will be released Sept 15. Rehn, meanwhile, sought to dampen expectations that so-called Eurobonds — debt backed by the entire eurozone — could be a quick and easy solution to the currency union's crisis. "It is clear that Eurobonds, in whatever form they were to be introduced, would have to be accompanied by a substantially reinforced fiscal surveillance and policy coordination," Rehn said. Such moves "would have unavoidable implications for fiscal sovereignty" and would require "substantive debate in euro area member states to see if they would be ready to accept it," Rehn added, indicating investors should not expect them to be introduced anytime soon.
- Market Turmoil Lands Hedge Funds With Big Losses. August, it now seems likely, will be the industry’s worst month since October 2008, when the collapse of Lehman Brothers triggered a worldwide sell-off. It will almost certainly also be one of the top five worst months for the industry since performance data started to be aggregated in 1990. According to the latest provisional figures from Hedge Fund Research, the average hedge fund manager has lost 4.1 per cent in the past four weeks. Equity-focused managers have fared even worse, losing an estimated 6.9 per cent – a staggering drop for an industry that prides itself on risk management, and charges accordingly.
- Sovereign Spreads Challenging Cherished Notions.
- Italy's tax burden will rise to 48.4% of GDP in 2013 from 46.6% in 2011 under the austerity plan approved by the Italian Cabinet on Aug. 12. The plan includes a tax increase for "high earners" as well as a special tax on profit of electricity utilities.
- Italy may increase its value-added tax to 21% from 20%.
Global Times:
- Shanghai Union Pleads for Inflation Fight. The Shanghai Federation of Trade Unions, a labor organization, has called for the local government to take further measures to curb inflation, noting the purchasing power of local workers has fallen 15.1 percent over the last 10 years. Shanghai wage earners' purchasing power dropped by 15.1 percent from 2001 to 2010, according to a survey conducted by the trade union. The survey found the loss grew more severe as the decade went on and purchasing power fell faster from 2006 to 2010 than it did from 2001 to 2005. In addition, Shanghai's consumer price index (CPI) hit a new high in July, up 5.6 percent over the previous month, with price increases in all sectors. On a national level, the price of pork surged 56.7 percent annually in July, putting the CPI up 6.5 percent year on year to hit its highest level in 37 months. Xiao is concerned the pace of salary increases lags far behind the increase of the CPI. "To better address the problem, local governments should perfect the price control system to restrain producers from irrationally raising prices, especially products or services that are tied in closely with daily life," he said.
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