Reuters: Situation in Europe is serious

This bill by Vitter is all crap. I got 94 votes becuase it has no meaning. IMF funding already happened and the issue is governed by Treaty Law not the U.S. Congress. IMF has the money and it can do whatever its own policy process allows it to do. Its like passing a law and telling the U.N. you don't want them to fund climate studies...it doesn't mean anything. This big show in Congress has no meaning. Is this really news to anybody?

 

http://news.bbc.co.uk/2/hi/business/10134734.stm

Thursday, 20 May 2010 21:21 UK

"The Spanish government has approved a 15bn-euro ($19bn; £13bn) austerity plan to rein in the public deficit and ease fears of a Greek-style debt crisis.

Many Spaniards fear the effect the cuts will have on the economy, where the unemployment rate exceeds 20%"

 

20%?
:eek:

 

I heard over 30% is more like it from someone in Spain. It would be nice to see their U6 stat.

 

U.K. Posts Record April Deficit of $14.4 Billion as Emergency Budget Looms

May 21 (Bloomberg) -- Britain posted its largest April budget deficit since monthly records began in 1993, highlighting the scale of the squeeze to come as Chancellor of the Exchequer George Osborne prepares to deliver an emergency budget.

The 10 billion-pound ($14.4 billion) shortfall compared with 8.8 billion pounds a year earlier, the Office for National Statistics said in London today. The result was below the 10.9 billion-pound median forecast in a Bloomberg News survey.

The report sets the scene for what economists say will be the sharpest cuts in public spending for a generation. Osborne has ordered departments to find 6 billion pounds of savings this year and will set out further measures in his June 22 budget.

“This is a hole that they’ll have to fill not just by spending cuts but also by tax rises,” said Peter Dixon, an economist at Commerzbank AG in London. “They have no room for maneuver.”

The pound extended gains against the dollar and was trading up 0.6 percent from yesterday at $1.4416 as of 10:00 a.m. in London. The 10-year gilt yield was unchanged at 3.56 percent.

Britain this month formed its first coalition government for 65 years following inconclusive elections, ending 13 years of Labour Party rule.

Coalition Unity

Conservative Prime Minister David Cameron and his Liberal Democrat deputy Nick Clegg yesterday said their parties were united over the need for immediate action to reduce the deficit, the largest in the Group of Seven at 11.1 percent of gross domestic product. Cameron has refused to rule out raising the rate of value-added tax, a 17.5 percent levy on sales.

The looming budget-cutting drive has overshadowed prospects for consumer spending as the economy emerges from its worst recession on record. Osborne has pledged to cut the deficit at a faster pace than Gordon Brown’s Labour government had planned.

Next Plc, the U.K.’s second-largest clothing retailer, said on May 5 that it was “very cautious” on the outlook for households because “whatever form this action takes, it is likely that it will act to restrain growth in consumer spending.”

The public finances typically get a boost in April as quarterly instalments of tax on company profits come in, and there are signs the recovery is starting to feed through.

Tax Boost

Current receipts rose 7.2 percent from a year earlier. In cash terms, VAT soared 34 percent, corporation tax gained 13 percent and national insurance contributions, a payroll tax, increased 22 percent. Government spending climbed 6.5 percent.

There was also a 7.5 billion-pound downward revision to the last fiscal year, 5.5 billion pounds of which came in March alone as higher receipts in April accrued to previous months. The statistics office said income tax and VAT led to increases.

For the fiscal year through March, net borrowing was 145.4 billion pounds rather than 152.8 billion pounds first reported. Excluding financial interventions, the Treasury’s main forecasting measure, the deficit was 156.1 billion pounds instead of 163.4 billion pounds.

A measure of cash entering and leaving the Treasury showed an 8.8 billion-pound deficit in April. Economists predicted a 7 billion-pound shortfall, according to the median forecast in a Bloomberg survey. Net debt climbed to 893.4 billion pounds, or 62.1 percent of GDP.

Separate data released today showed business investment rose in the first quarter. Corporate spending on equipment, vehicles and buildings increased 6 percent from the previous three months. It dropped 11 percent from a year earlier.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ai9SQaZZcRCM&pos=3

 

Their UE has to be taken in context. Given the generous UE benefits, plus the difficulties companies have in actually firing people (which means they're less likely to hire in the 1st place), I would guess the "natural" rate of unemployment is somewhere around 10% or more.

Its been years since I was in Spain, but my recollection of the country was that it was hard to find anyone who actually worked! Imagine, if you will, a nice Spring day like the one we had yesterday on the East Coast. All of the restaurants w/porches or sidewalk seating are teaming w/people enjoying a drink and the lovely weather, and not in a hurry to get back to work. Well, that's Spain 100% of the time.

 

How does that scene look once the nanny state is forced to take the credit card away?

 

U.K. Posts Biggest Budget Deficit Since World War II

April 22 (Bloomberg) -- Britain registered its biggest annual budget deficit since the second world war as the political dispute over the government finances intensified.

The 152.8 billion-pound ($234 billion) shortfall in the fiscal year through March was 76 percent higher than a year earlier, the Office for National Statistics said today in London. In March, the deficit was 23.5 billion pounds, the biggest monthly gap since records began in 1993. The figure was in line with the median forecast in a Bloomberg News survey.

With the election two weeks away, parties are sparring over how to tackle the largest deficit in the Group of Seven. The Conservative opposition yesterday raised the specter of an International Monetary Fund bailout if the vote produces an indecisive result.

“It’s a reminder that the key economic issue facing the electorate is the deficit,” said David Tinsley, an economist at National Australia Bank in London and a former Bank of England official.

The pound was down 0.1 percent at $1.5392 as of 11:57 a.m. in London, having earlier gained as much as 0.4 percent.

Labour Prime Minister Gordon Brown, who faces his opposition challengers tonight in the second of three live televised debates, is fighting the election by arguing that Conservative plans to cut spending this year risk wrecking the recovery.

Hung Parliament

Polls show both parties losing support to the Liberal Democrats, raising the prospect that Labour will emerge as the largest party in Parliament and remain in power with Liberal Democrat support.

Conservative economics spokesman George Osborne yesterday warned that Britain could be forced to appeal to the IMF for help if voters choose a parliament where no party has overall control.

“If markets feel we don’t have the confidence to deal with our debts, then we’d have to call the IMF in, and that is a statement of fact,” Osborne said during a debate BBC television debate. “We’ve got to be aware in this country of the consequences of political instability.”

The deficit in the last fiscal year was slightly lower than the 156 billion pounds forecast by Chancellor of the Exchequer Alistair Darling in his budget in March. Excluding financial- sector interventions, the shortfall was 163.4 billion pounds compared with a Treasury prediction of 166.5 billion pounds.

Ballooning Deficit

The deficit, which was 2.4 percent of gross domestic product in 2007-2008, ballooned as the worst financial crisis since the Great Depression plunged Britain into an 18-month recession. Borrowing excluding interventions amounted to 11.6 percent of GDP last year.

Signs of improvement emerged in the March figures, which showed revenue rising 3.8 percent, the fourth increase in five months, as taxes from corporate profits and sales of goods and services gained. Spending climbed 11 percent.

A measure of the cash entering and leaving the Treasury showed a 25.8 billion-pound deficit last month. Economists predicted a 31.3 billion-pound shortfall, according to the median forecast of 11 economists. Total net debt climbed to 62 percent of GDP, or 890 billion pounds, from 60.5 percent of GDP in February.

‘Painful’ Cuts

While the Conservatives have pledged to go further and faster than Labour plans to cut the deficit in half by 2014, “painful” cuts beyond the efficiency savings already pledged by both parties will be needed to repair the public finances, the Institute for Fiscal Studies said in a report yesterday.

“None of the parties has been clear enough to spell out how they’ll cut the deficit if they’re elected,” Colin Ellis, an economist at Daiwa Capital Markets Europe Ltd. in London and a former Bank of England official, said in an interview. “The government doesn’t want to do that and so neither do the Conservatives and the Liberal Democrats because they’re all running scared of frightening the electorate.”

Labour and the Liberal Democrats yesterday dismissed the Conservatives’ warnings about a hung parliament as scaremongering. Campaigning in southwest England today, Brown defended his decision to delay spending cuts until next year.

“We’ve got to secure the recovery now,” he told factory workers in Bristol. “We’ve worked so hard to secure growth and we want to sustain that growth over the next few months and I would urge people not to do anything that put that recovery at risk.”

http://www.bloomberg.com/apps/news?pid=20601102&sid=a2WPb0dCaqQU

 

Why not write of loans where they cause the least damage?

 

Spain and UK are the next Greece.