The Center of the Universe

St Croix, United States Virgin Islands

MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Archive for December 20th, 2010

Australia

Posted by WARREN MOSLER on 20th December 2010

I don’t follow it at all closely but in general they have been following a policy of budget surpluses and relying on increasing levels of private sector debt to sustain aggregate demand.

That’s not sustainable, even for China’s coal mine, and especially with China showing signs of slowing down.

Retailers cry poor as sales drop sharply during Christmas period

By Nick Gardner and Brittany Stack

December 19 — MAJOR store bosses claim Australia is experiencing a retail recession, with the quietest and slowest Christmas shopping period in 20 years.

Rising utility bills, mortgage rates and rents have decimated families’ disposable incomes, forcing many retailers to start Boxing Day sales one month in advance in a bid to entice shoppers, reported The Daily Telegraph.

Harvey Norman boss Gerry Harvey said there would be “blood on the streets” in the retail sector because business is so bad, the worst since the recession of the early 1990s.

“It’s a crisis, the worst in 20 years,” he said.

“There is a recession in retail right now. Boxing Day sales have had to come early because retailers need to sell something to pay their staff.”

The news comes as the Government announced an inquiry into the future of the retail sector to examine issues of competition, and the $1000 GST and duty-free threshold on overseas shopping.

Australian retailers and shopping centre owners have formed an alliance to try to persuade the government to abolish the $1000 GST-free threshold. They plan to spend millions on an advertising campaign to try to have imported goods subject to tax and import duty. Mr Harvey is not alone in his bleak outlook.

David Jones and Myer are offering discounts of up to 40 per cent across all departments in their Sydney stores, saying it was the toughest environment for years.

“Retail is challenging right now and to drive people into stores we are offering significant discounting,” Myer spokesman Mitch Catlin said.

“Every retailer is doing it. It is the best final week I can remember for consumers going into Christmas.”

David Jones described its sales as “patchy”.

Retailers traditionally make up to a third of their annual profits in December, but sales are down across the board as stores battle plummeting sales, shrinking profit margins and increased competition from overseas websites.

Russell Zimmerman, executive director of the Australian Retailers’ Association, said he’d never seen tougher conditions in 30 years.

“We’ve had 43 per cent of our retailers reporting sales figures for the period from December 5 to 11 at below last year’s levels. To have so many suffering falling sales is terrible.”

He said consumers have been affected not only by rate rises and higher utility bills but also spooked by events overseas. “They’re seeing economies such as Greece and Ireland in crisis and they’re getting worried,” Mr Zimmerman said.

He predicted retail sales of $39.9 billion, a 3.5 per cent rise on last year or about half the usual increase. He said this may force retailers to cut staff hours or cut back on casual workers. “We’re hoping for a good last week into Christmas,” he said.

Posted in Comodities, Deficit, Government Spending | 5 Comments »

china inflation – ft article

Posted by WARREN MOSLER on 20th December 2010

Sounds like the ‘managing expectations’ they teach at the western universities.

Inflation is under control, says Chinese regulator

By Jamil Anderlini

December 17 (FT) — “The recent inflation is completely different from the periods of very high inflation that China has encountered in the past,” Mr Liu, chairman of the China Banking Regulatory Commission, said on Friday.

“There is overcapacity for most industrial goods in the Chinese market and it’s impossible for upstream inflation to be transmitted downstream.”

The relatively sanguine assessment also partly explains why Beijing appears set to grant Chinese banks a lending quota next year that is roughly the same as this year’s, or even slightly higher, even though the economy is already awash with liquidity.

Posted in China, Inflation, Uncategorized | No Comments »

ECB Has ‘Serious Concerns’ About Irish Bank Proposals

Posted by WARREN MOSLER on 20th December 2010

EU Headlines
ECB Has ‘Serious Concerns’ About Irish Bank Proposals

And they call the shots now.

Trichet Says Euro Remains Credible; States Leaving Is ’Absurd’
EU Nations Violating Deficit Caps May Be Fined Up to 0.5% of GDP

Fines have proven unworkable.

My proposal for annual distributions from the ecb to the member govts on a per capita basis with terms and conditions is far more easily enforceable.

It’s a lot easier politically to withhold payment than to fine and collect.

European financials see dollar funding gap widen

Euro banks in dollars are a higher risk than US banks in dollars so a higher price of funding makes perfect sense to me.

Their deposit insurance is not yet credible, and the ECB has limited ability to lend in dollars.

And it also means none of them should be in the libor basket if their rates exceed US banks.
But they are, and the Fed doesn’t want libor to go up beyond its desired rate targets, so this Fed is likely to again lend unsecured to the ECB and other CB’s for the purpose of keeping libor rates down on an as needed basis.

EU rushes to raise bail-out cash

It will ultimately come from the ECB

German Tax Intake Rises as Recovery Firms, Handelsblatt Reports

Growth that reduces the deficit also slows the expansion

Germany’s robust economy not enough to stop record debt
France’s AAA Grade at Risk as Rating Cuts Spread: Euro Credit

The are all in ponzi (required to borrow to make payments), including Germany.
The ratings agencies seem to be slowly coming around to viewing them as US States,
as they should have done from inception.

Posted in ECB, EU | 9 Comments »