Europe’s New Budget Rigor, ECB’s Challenge
European leaders’ blueprint for a closer fiscal union to save their single currency left the onus on central bankers to address investor concerns that Italy and Spain would succumb to the two-year-old financial crisis. On the 20th anniversary of the Maastricht summit that created the euro and 19 months since leaders forged their first plan to contain the debt turmoil, leaders added 200 billion euros ($267 billion) to their warchest and tightened rules to curb future debts. They sped the start of a 500 billion-euro rescue fund to next year and diluted a demand that bondholders shoulder losses in rescues.
Steve Liesman on CNBC showed all of the National Retail Federation numbers for spending plans this holiday season. Increases of 22%, big numbers. Unfortunately, Steve omitted to show how the actual data of the past years have lined up with the NRF forecasts. As was discussed this past Sunday in the Washington Post, the answer is not particularly well. Indeed, when we look at how far off these surveys have been in the past, it makes one wonder why anyone should pay any attention to them at all. In 2005, based on a survey on Black Friday and Saturday, the NRF forecast a 22% percent increase in holiday shopping based on surveys conducted over the Thanksgiving weekend. The actual results? Up just 1 percent.
The long-predicted crash has arrived with a vengeance in China's original ghost city. Home prices have plunged by one third recently, down 60% from 2006, in Kangbashi, the ambitious second city built on the outskirts of Ordos. Developers, investors and migrant workers are all giving up on Kangbashi. "Ordos is the first of a number of these ghost cities that will see similar magnitude price declines," says Gillem Tulloch of Asianomics. The bigger issue, however, will be if declines reach the major cities. "The degree of price declines you are seeing in Kangbashi give a preview of what you will see in major cities. I would expect price declines of 20% nationwide over the next 1-2 years," Tulloch said.
German authorities said Thursday that a suspicious envelope intercepted by Deutsche Bank employees was a letter bomb sent to the bank’s chief executive, Josef Ackermann, one of the most powerful and controversial figures in European banking. In a joint statement the state police in Hessen and the Frankfurt prosecutor’s office said that “initial investigations show that this was a functional letter bomb.” The letter was addressed personally to Mr. Ackermann. There was no immediate claim of responsibility for sending the letter bomb to Mr. Ackermann, and the police did not name any suspects or suspected groups. The Frankfurt offshoot of the Occupy Wall Street movement condemned the action.
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