Today's Headlines

Bloomberg:

• Germany Can Ratify ESM Fund With Conditions, Court Rules. Germany’s top constitutional court rejected efforts to block a permanent euro-area rescue fund, handing a victory to Chancellor Angela Merkel, who championed the 500 billion-euro ($645 billion) bailout facility. The Federal Constitutional Court in Karlsruhe dismissed motions that sought to block the European Stability Mechanism, while ruling Germany’s 190 billion-euro contribution can’t be increased without legislative approval. The court said Germany can ratify the ESM if it includes binding caveats that it won’t be forced to assume higher liabilities without its consent. “We are an important step closer to our goal of stabilizing the euro,” German Economy Minister and Vice Chancellor Philipp Roesler told reporters in Berlin after the ruling today. “It has always been the goal of this government” to establish a “clear limit and to include parliament in all important decisions.” The legal challenge to the ESM and a fiscal pact, designed to impose budget discipline on European Union members, delayed efforts by Merkel and other euro-area policy makers to stem the region’s debt crisis. In the neighboring Netherlands, Prime Minister Mark Rutte, a Merkel ally, is seeking re-election today.
• Schaeuble Says Court Ruling Means ECB Can't Use Money Press: ZDF. German Finance Minister Wolfgang Schaeuble said the decision by Germany's Constitutional Court rules out that the ECB "makes government funding through the money press," citing Schaeuble. Germany may take legal action if the ECB doesn't follow the German court's decision, Schaeuble said.
  
• Merkel’s Court Win on Euro Rescue Resonates Across Debt Divide. Chancellor Angela Merkel’s court victory on policy for saving the euro was hailed by southern Europe as well as her northern allies as German bailout critics failed to stop the joint currency’s permanent rescue fund. With an extension of Greece’s bailout still undecided and Spain holding out on seeking a sovereign rescue, today’s German constitutional court verdict avoids worsening the debt crisis as it approaches its third anniversary. It also hands Merkel ammunition against domestic opponents who see German taxpayers’ money at risk in the name of a united Europe.
• France Said to Press Spain to Seek EU Aid Over German Concerns. France is pressing Spain to snub German concerns and request help from the European Union to contain the euro-area financial crisis, according to three people familiar with negotiations. French officials want Spain to ask the EU’s bailout fund for help to consolidate gains in southern European bonds since European Central Bank President Mario Draghi said the ECB will back up the rescue package by buying unlimited amounts of debt in the secondary market, said the people, who asked not to be named because the lobbying effort is private. Spanish Prime Minister Mariano Rajoy, who has been calling for the ECB to buy government bonds since taking office in December, has spent six weeks hesitating since Draghi said Aug. 2 that any aid would have conditions attached. Rajoy today said he may not need a second bailout because the ECB’s pledge already cut borrowing costs. German policy makers say they would force Spain to accept conditions in exchange for support. “I don’t know if it’s necessary for Spain to ask for it, let’s see how the risk premium evolves in the coming period,” Rajoy told lawmakers today in Parliament in Madrid. He will take the decision to protect “Spaniards’ interests” after assessing the conditions, he said.
• Big Stimulus Would Harm China Long-Term Growth: Xinhua. Massive stimulus measures would be "detrimental" to China's sustainable economic growth, the official Xinhua News Agency wrote in a commentary. While growth in the world's second-biggest economy has slowed for six-straight quarters, such fiscal spending is unlikely. Authorities are aware of the limitations of a possible stimulus plan, writer Liu Jie said. The 4 trillion yuan stimulus in 2008 led to large local-government debts and bad loan risks.
• India Industrial Output Misses Estimates as Economy Falters. Indian industrial production rose less than economists estimated in July, adding to signs that Asia’s third-largest economy is faltering. Production at factories, utilities and mines climbed 0.1 percent from a year earlier, after a 1.8 percent slide in June, the Central Statistical Office said in a statement in New Delhi today. The median of 33 estimates in a Bloomberg News survey was for a 0.5 percent gain.
• Apple Unveils IPhone 5 to Extend Lead in Smartphone Market. Apple Inc. (AAPL) unveiled a new version of the iPhone that boasts a bigger screen, faster chip and access to speedier wireless networks, an overhaul aimed at widening its lead over Samsung Electronics Co. (005930) and Google Inc. (GOOG) in the $219.1 billion smartphone market.
• Burberry’s Stagnating Sales Indicate End to Luxury Boom.

Wall Street Journal:

• U.S. Ambassador to Libya Is Killed. The U.S. ambassador to Libya, Christopher Stevens, and three other American diplomats were killed when suspected Libyan religious extremists stormed the U.S. Consulate in Benghazi late Tuesday, sparking a security crisis across the North African country and raising tensions across the Middle East. Libyan officials spent the night in a manhunt trying to find those responsible for the killings, which occurred when an angry armed mob attacked the diplomatic complex in an apparent protest against an anti-Islamic video created and produced by an American-Israeli real-estate developer.
• Romney Slams Obama Over Embassy Attacks. Mitt Romney on Wednesday renewed his criticism of President Barack Obama over the administration's handling of attacks on U.S. diplomatic missions in Libya and Egypt, saying its early response to the incidents amounted to an apology for American values.
• Protesters Gather Outside U.S. Embassy in Tunisia. An Associated Press photographer present Wednesday witnessed demonstrators burning and trampling a number of American flags. Protesters were kept back from the embassy by reinforced security.
• Libya Violence: Full Coverage.
• Economists Skeptical on More Fed Easing.
  
• Gramm and Taylor: The Hidden Costs of Monetary Easing. Inflation is not the only danger posed by the central bank's ballooning balance sheet. Since mid-September of 2008, the Federal Reserve balance sheet has grown to $2,814 billion from $924 billion as it purchased massive amounts of U.S. Treasurys and mortgage backed securities. To finance those purchases the Fed increased currency and bank reserves (base money).
  

CNBC.com:

• Dodd-Frank Won't Prevent Another Financial Crisis: Pros. A range of regulatory failures caused the financial crisis in 2008 and the Dodd-Frank Act will not prevent a future financial crisis, two bank executives told CNBC's "Squawk Box" on Wednesday.
• Chicago Teachers Strike May Drag On, Talks Stall. With more than 350,000 children from kindergarten to high school age out of school, the patience of parents and labor negotiators began to fray as hopes of a quick resolution to the biggest U.S. labor strike in a year were dashed.

Business Insider:

• The US Believes The Attack That Killed Ambassador In Libya Was Planned.
• This Is What America's Consulate In Libya Looked Like After The Deadly Attacks.
• 8 Must-See Charts On The Euro Crisis From Jeff Gundlach.
• 3 Reasons The Fed Should Not Do QE3.
• CHINA CRASH 2012: Here's How It's Finally Happening This Time.
• Meet The Ivy League-Educated, Wisecracking Woman Leading The Chicago Teachers Strike.

Zero Hedge:

• America Under Attack: Pictures Of Assault On US Consulate In Libya.
• Cui Bono Fed: Who Benefits from the Federal Reserve?
• Farage's Berating Rebuttal Of Barosso's 'State-Of-The-Union' Banalities.

CNN:

• Chovanec on China's Mounting Bad Debts. (video) Above is a must watch video interview on CNN with Patrick Chovanec, an associate professor at Tsinghua University in Beijing, talking about the mounting bad debt problems in China, and the likelihood of the Chinese economy experiencing a debt crisis, similar to that transpiring in Europe, or a replay of Japan’s ‘lost decade’.

engadget:

• Live Blog: Apple(AAPL) Event.
  

Reuters:

• Fitch cuts highway bond programs on dim view of U.S. policy.
• Swiss fume at U.S. "hypocrisy" over whistleblower's $104M payout. Many Swiss are fuming after a whistleblower, who helped prosecute Swiss bank UBS for helping rich Americans avoid taxes, was paid a record $104 million by U.S. authorities after being jailed for his own part in the affair. "It's the height of hypocrisy if the U.S. is one day sentencing the guy to 40 months in prison and the next give him the highest reward," Pirmin Bischof of the centre-right Christian Democrats and a member of parliament's upper house told Reuters.

AP:

• US poverty rate unchanged; record numbers persist. The ranks of America’s poor remained stuck at record levels, although dwindling unemployment benefits and modest job gains helped stave off what experts had predicted would be the fourth rise in a row in the poverty rate. Also, the median, or midpoint, household income was $50,054, 1.5 percent lower than 2010 and a second straight decline. The overall poverty rate stood at 15 percent, statistically unchanged from the 15.1 percent in the previous year.

Telegraph:

• German Constitutional Court tightens the noose yet further.

Nikkei:

• Bank of Japan Concerned About Slowing Exports to China. Slowing exports to China are raising concern. The BoJ may further cut its view of exports after last month saying a pickup has moderated.
  

ShanghaiDaily.com:

• Closer look at home-buying curbs. THE Shanghai Municipal Housing Authority will this month start to scrutinize that home-purchase restrictions are enforced in the city as it seeks to ensure the rapid rise in home prices has been curbed. The authority will selectively check property projects that are currently for sale in the city. Properties that are over-priced, or registering abnormal sales volume, or involving a large proportion of non-local buyers will be targeted in the monitoring. The scrutiny will last until the end of this year, the authority said.
• Suppliers may cut prices to get orders. SUPPLIERS in China may be forced to cut prices of their products if they hope to secure new orders in the current global economic downturn, participants at the 11th International Sourcing Fair warned.