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bank of england

Posted On 8:10 PM by cma | | 0 comments


Many financial advisors and much of the academic literature often argue that young people should place most of their savings in stocks. In contrast, a significant fraction of U.S. households do not hold stocks. Investors typically hold very little in stocks when they are young, progressively increase their holdings as they age, and decrease their exposure to stock market risk when they approach retirement. The authors show how long-run labor income risk helps explain this evidence. Moreover, they discuss the effect of long-run labor income risk on the valuation of pension plan obligations, their funding, and the allocation of pension assets across different investment classes. (PDF,658KB)
Preannounced tax cuts and their potential influence on the 2001 recessionR. Andrew Butters Marcelo Veracierto The authors present a model in which anticipated future tax cuts, like those promised during the 2000 U.S. presidential campaign, generate a contraction in economic activity with some of the atypical features observed during the 2001 recession (such as its relatively strong consumption and home investment). (PDF,643KB)

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Posted On 7:59 PM by cma | | 0 comments


By Dakin Campbell
Aug. 29 (Bloomberg) -- Regulators closed banks in California, Maryland and Minnesota yesterday, pushing U.S. bank failures to 84 this year amid continuing fallout from the worst economic crisis since the Great Depression.
The Federal Deposit Insurance Corp. was named receiver for Affinity Bank of Ventura, California, Bradford Bank of Baltimore and Mainstreet Bank of Lake Forest, Minnesota, after yesterday’s closings, the FDIC said. Assets of $1.9 billion and deposits of $1.7 billion from the three banks were turned over to new lenders at a total cost of about $446 million to the FDIC’s deposit insurance fund, according to agency statements.
Regulators have closed banks at the fastest pace in 17 years and more are likely as losses mount from soured real- estate debt. A total of 416 banks with combined assets of $299.8 billion failed the FDIC’s grading system for asset quality, liquidity and earnings in the second quarter, the most since June 1994, the regulator said in a report Aug. 27.
Pacific Western Bank of San Diego will assume the deposits of Affinity Bank, the FDIC said. Affinity, with $1 billion in assets and $922 million in deposits, had 10 branches. Two, based in San Mateo and San Francisco, will open today as Pacific Western branches; the rest will open Aug. 31 under new ownership, according to the FDIC. The regulator agreed to share losses on $934 million of the assets.
Central Bank of Stillwater, Minnesota, assumed $434 million in deposits at Mainstreet Bank, the FDIC said. Central Bank will pay a premium to purchase Mainstreet’s $459 million in assets, with the FDIC sharing losses on about $268 million. Mainstreet’s eight branches will open today as Central offices.
Buffett Stake
Manufacturers & Traders Trust Co. of Buffalo, New York, took over the deposits of Bradford Bank, the FDIC said. M&T, whose parent counts billionaire investor Warren Buffett among its biggest shareholders, is buying Bradford’s $383 million of deposits and $452 million in assets. The FDIC is sharing losses on $338 million of assets in the deal, the regulator said.
Bradford is the second Maryland-based bank acquired this year by M&T, which bought Baltimore-based Provident Bankshares Corp. in May. M&T picked up $5.1 billion in deposits and $6.3 billion assets in the Provident deal, according to a company filing.
The FDIC insures deposits at 8,195 institutions with roughly $13.5 trillion in assets and reimburses customers for deposits of up to $250,000 per account when a bank fails. The surge in failures has depleted the Washington-based regulator’s deposit insurance fund, which fell to $10.4 billion at the end of June from $13 billion in the previous quarter, the agency said. The total was the lowest since 1993.
Added Assessment
FDIC Chairman Sheila Bair said in an Aug. 5 Bloomberg Television interview that the agency will likely levy another fee this year to replenish the deposit insurance fund. The agency has already raised $5.6 billion through an added assessment and has the authority to levy two more before the end of the year.
The collapses of Bradford and Mainstreet brought down lenders with roots reaching back more than a century, according to their Web sites, a departure in a banking crisis that has seen failures concentrated among newer companies. The FDIC yesterday moved to address that trend, extending to seven years from three years the time new banks must maintain higher capital levels and face more frequent examinations.
The agency has brokered the 6th and 11th largest bank failures in U.S. history this year in Birmingham, Alabama-based Colonial BancGroup Inc. and Austin, Texas-based Guaranty Financial

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The World Bank

Posted On 7:40 PM by cma | | 0 comments


The World Bank provides over $24 billion in assistance to developing and transition countries every year. The Bank's projects and policies affect the lives and livelihoods of billions of people worldwide - sometimes for the better, but very often in controversial and problematic ways.
The World Bank was originally established to support reconstruction in Europe after World War II, but has since reframed its mission and expanded its operations both geographically and substantively. Today, the Bank's mission is to reduce poverty. It has over 184 member countries and provides over $24 billion annually for activities ranging from agriculture to trade policy, from health and education to energy and mining. The World Bank provides funding for bricks-and-mortar projects, as well to promote economic and policy prescriptions it believes will promote economic growth. For example, part of the over $300 million the Bank is currently providing the West African country of Niger funds health programs addressing HIV/AIDS and irrigation. However, the Bank also promotes more controversial projects in the country, like privatization of state enterprises.
The World Bank is not a bank in the common sense of the word. A single person cannot open an account or ask for a loan. Rather, the Bank provides loans, grants and technical assistance to countries and the private sector to reduce poverty in developing and transition countries.
The World Bank Group is actually comprised of five separate arms. Two of those arms - the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) work primarily with governments and together are commonly known as "the World Bank". Two other branches - the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) - directly support private businesses investing in developing countries. The fifth arm is the International Center for Settlement of Investment Disputes (ICSID), which arbitrates disagreements between foreign investors and governments. This webpage outlines key features of the two arms that are now collectively referred to as the World Bank: IBRD and IDA. Find out more about MIGA and the IFC (BIC website).

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JAPAN'S UNEMPLOYMENT

Posted On 8:45 PM by cma | | 0 comments

Japan's unemployment rate rose to a record 5.7% in July in figures released just days before a general election.
Companies are continuing to lay off workers even though the economy has returned to growth after the most bruising recession for decades.
The state of Japan's economy is the key issue in the election campaign.
Opinion polls show the Liberal Democratic Party, which has governed for 53 of the last 54 years, faces defeat in the election.
News that the unemployment rate has risen to the highest since the Second World War is a blow for the Prime Minister Taro Aso.
Opinion polls show his Liberal Democratic Party was already on course for defeat on Sunday for only the second time in more than 50 years.
In July, 3,590,000 Japanese were out of work in July, over a million more than a year ago.
Japan's crushing recession is officially over, but the benefits are yet to be felt by families and workers.
Other figures released in Tokyo show core consumer prices fell by 2.2% in July from a year earlier, the fastest pace on record.
Japan was stuck in a deflationary spiral for years after an asset price bubble burst at the start of the 1990s.
Shoppers put off purchases in the expectation of prices falling further, causing the economy to stagnate.

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Posted On 8:38 PM by cma | | 0 comments


The first wake-up call came on 12 May 2003 - a co-ordinated suicide bombing blamed on al-Qaeda of three housing compounds for foreigners in the capital Riyadh that left 35 people, including at least nine bombers, dead.
At the time it was described as the kingdom's own 9/11 - and it galvanised the Saudi authorities into taking their first serious steps to join the US government's "global war on terrorism".
Six months later, 17 people were killed when another compound, this time one for Arab families, was bombed - right on the doorstep of one of the royal palaces in Riyadh.
Since then the Saudis have rounded up more than 600 Islamic militant suspects and seized large quantities of arms, and they have killed or captured most of the men on a wanted list containing 29 names.
But attacks by suspected al-Qaeda supporters have continued, and - for a while - seemed to by gaining sophistication.
However, Saudi government aides say the latest bout of high-profile terrorism, an attack on the US consulate in Jeddah, has shown that while the threat may not be over it may be being brought under control.
Crescendo of killing
The most sustained period of attacks started on 21 April 2004, when a Riyadh police headquarters was struck by a suicide attacker, killing four people.
Then came a gun rampage at a petrochemical company on 1 May in the Red Sea port of Yanbu which left six Westerners and a Saudi dead.
They are willing to kill themselves to achieve their purposes - it's practically impossible to prevent them
Prince Turki al-Faisal
Timeline: Saudi attacks Three of the gunmen apparently worked at the company and used their entry passes to gain access to their victims - one of whom was paraded through the streets in a grisly ritual.
Following that, a German citizen was gunned down by unidentified attackers on a Riyadh street.
Then came one of the most high profile attacks, in Khobar in which 22 civilians were killed. The attackers escaped, slipping through a police cordon which some outside security experts said showed signs of collusion between besiegers and besieged.
Since then nothing has come close to the Khobar bloodshed, although there has been a steady succession of shootings and ambushes - including one that killed a BBC cameraman and left his colleague seriously injured.
Last gasp?
There are two schools of thought regarding Saudi Arabia's security problem.
Saudi officials insist this is the last gasp of a movement that the state has done everything to shut down, through strong policing, good intelligence, and curbing the very ideology that produces these attacks.

The string of attacks has perplexed Saudi ArabiaIn May officials said six terror cells had been identified in the previous 12 months, consisting of about 25-to-30 members each. They said five of the six have now been smashed by the security forces.
But the credibility of Saudi officials' claims has been undermined by the continuation of small-scale shootings linked to Islamic militants - an Irish citizen gunned down in his office in August, a Briton and a Frenchman in separate incidents in September.
Saudi ambassador to the UK Prince Turki al-Faisal - himself a former Saudi intelligence chief - told the BBC that it would be very difficult to scotch the movement entirely.
"These people are willing to kill themselves to achieve their purposes, it's practically impossible to prevent them totally from taking their action," he said in a BBC interview in May.
But it seems true that the killers have not been able to repeat their earlier spectacular successes - perhaps because across the kingdom likely targets are now heavily guarded and on high alert around the clock.
Anger and hatred
The other school of thought holds that Saudi Arabia is incapable of quelling the massive groundswell of anger and hatred towards the West engendered by the US-led invasion of Iraq and the Israel-Palestinian conflict that triggers such attacks.

Accusations of complicity have dogged the security servicesAuthor and former CIA operative Robert Baer said the killings in May - in the Saudi oil producing heartland - were meant to send a direct message to the Opec meeting of oil exporting countries.
He said the militants were giving expression to many ordinary Saudis' discontent about government plans to increase production to bring world oil prices down, in particular to help the US economy.
"Saudi Arabia's oil facilities are vulnerable and a determined effort could take one of these facilities out," Mr Baer said.
However the fact is that terrorist successes have been few and far between in the last six months. Where they do occur they have mainly been against softer targets.
When something high-profile like a US consulate is targeted, the death toll seems much lower and the security forces seem much more able to cope than in earlier attacks.
But are the authorities really just mopping up the last remnants of the militants? It may be premature to say that.

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cumulative $9tn from 2010-2019

Posted On 8:29 PM by cma | | 0 comments


Fuelled by President Obama's $787bn stimulus package and reduced tax revenues due to the recession, it compares with a $455bn deficit in 2008.
The White House says the deficit will grow further, predicting it will hit a cumulative $9tn from 2010-2019.
However, it continues to expect the US economy to start to recover this year.
The White House expects US unemployment to pass 10% this year, before slowly declining in 2010. The most recent official figures showed the rate at 9.4% in July.
'Dire situation'
The latest deficit predictions have come from the White House and the non-partisan Congressional Budget Office (CBO).
The alarm bells on our nation's fiscal condition have now become a siren
Senate Republican minority leader Mitch McConnell
"Overall, it underscores the dire fiscal situation that we inherited, and the need for serious steps to put our nation back on a sustainable fiscal path," the White House's Office of Management and Budget director Peter Orszag said.
Christina Romer, one of the president's economic advisers, said the recession "was simply worse" than first predicted.
She said the White House now estimated that the economy will contract by 2.8% in 2009, more than double when it predicted earlier this year.
It now expects growth of 2% in 2010, down from its previous prediction of 3.2%, but with economic expansion recovering to 3.6% in 2011.
'Out of control'
Republicans said the latest deficit figures were a serious concern.
"The alarm bells on our nation's fiscal condition have now become a siren," said Senate Republican minority leader Mitch McConnell.
"If anyone has any doubts that this burden on future generations is unsustainable, they're gone - spending, borrowing and debt are out of control."
Analysts said the latest deficit figures increased the likelihood of US tax rises once it is confirmed that the country has exited recession.
The CBO said such a move would be required.
"Putting the nation on a sustainable fiscal course will require some combination of lower spending and higher revenues than the amounts now projected," it said.

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US GDP between January and March

Posted On 8:03 PM by cma | | 0 comments


Analysts had been expecting a downward revision, with some forecasting a contraction of 1.5%.
The second quarter figures were an improvement on the 6.4% annual rate of contraction between January and March.
US growth figures are revised frequently and the different estimates can vary significantly.
The better-than-expected figure for the second quarter of the year will provide further optimism to investors looking for more signs of recovery in the US economy.
WHAT IS GDP?
Gross Domestic Product, referred to simply as GDP, is the most commonly used indicator of national income. In essence, it measures the economic output of an economy
The US uses something called annualised GDP, which reflects the change over a certain period if it were continued at the same pace over a whole year.
GDP figures are often revised, but particularly so in the US. For example, figures for US GDP between January and March were first estimated at a 6.1% contraction. This figure was subsequently revised up to a 5.7% contraction, then up to 5.5%, before being revised down to 6.4%.
On Wednesday, figures showed that orders for US durable goods - those that are expected to last more than three years - increased by 4.9% in July, well above analysts' expectations.
At the same time, separate figures showed that the annual rate of sales of new US homes rose 9.6% last month, again higher than expectations.
This was the biggest rise in sales of new houses since September last year.
Data released last week showed a 7.2% rise in existing home sales in July.
All these encouraging figures were released after US central bank chief Ben Bernanke said the US economy was close to recovery.
"The prospects for a return to growth in the near term appear good," he told a conference in Wyoming last week.
Earlier this month, figures showed that the Japanese, German and French economies have emerged from recession.
Japanese gross domestic product (GDP) grew by 0.9% in the second quarter of 2009, while German and French GDP both grew by 0.3%. Fuelled by President Obama's $787bn stimulus package and reduced tax revenues due to the recession, it compares with a $455bn deficit in 2008.
The White House says the deficit will grow further, predicting it will hit a cumulative $9tn from 2010-2019.
However, it continues to expect the US economy to start to recover this year.
The White House expects US unemployment to pass 10% this year, before slowly declining in 2010. The most recent official figures showed the rate at 9.4% in July.
'Dire situation'
The latest deficit predictions have come from the White House and the non-partisan Congressional Budget Office (CBO).
The alarm bells on our nation's fiscal condition have now become a siren
Senate Republican minority leader Mitch McConnell
"Overall, it underscores the dire fiscal situation that we inherited, and the need for serious steps to put our nation back on a sustainable fiscal path," the White House's Office of Management and Budget director Peter Orszag said.
Christina Romer, one of the president's economic advisers, said the recession "was simply worse" than first predicted.
She said the White House now estimated that the economy will contract by 2.8% in 2009, more than double when it predicted earlier this year.
It now expects growth of 2% in 2010, down from its previous prediction of 3.2%, but with economic expansion recovering to 3.6% in 2011.
'Out of control'
Republicans said the latest deficit figures were a serious concern.
"The alarm bells on our nation's fiscal condition have now become a siren," said Senate Republican minority leader Mitch McConnell.
"If anyone has any doubts that this burden on future generations is unsustainable, they're gone - spending, borrowing and debt are out of control."
Analysts said the latest deficit figures increased the likelihood of US tax rises once it is confirmed that the country has exited recession.
The CBO said such a move would be required.
"Putting the nation on a sustainable fiscal course will require some combination of lower spending and higher revenues than the amounts now projected," it said.

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