- — Photo Courtesy of http://www.ce-authorizedrepresentative.eu —
After 25 ½ hours of talks in Brussels, the 2014 – 2020 European Union Budget was agreed upon including deeper cut as pressed by U.K. Prime Minister David Cameron to 960 billion euros down for 1.047 trillion euros less than the current budget.
“We simply could not ignore the extremely difficult economic realities across Europe,” EU President Herman Van Rompuy told reporters. “It’s perhaps nobody’s perfect budget, but there’s a lot of it for everybody. This budget is future- oriented, it is realistic and it is driven by pressing concerns.” Read more for details.
U.S. regulators have suspended work on oil rigs due to faulty bolts used in deep water drilling discovered after the worst U.S. maritime crude spill. The suspension of operation has been given to oil rigs that use General Electric devices connecting drilling tubes to safety gear at the sea floor. Chevron Corp, Royal Dutch Shell Plc and Transocean Ltd operations have been suspended by regulators.
“This certainly will be costly for the industry,” Craig Pirrong, director of the University of Houston’s Global Energy Management Institute said in a telephone interview yesterday. “This is a result of increasing government scrutiny of deep-water activities. The question is, will the increased costs be so onerous that they discourage some companies” from searching the deep oceans for crude? Read more for details.
- — Photo Courtesy of cnbc.com —
According to a Bloomberg Global Survey, the economy is in its best shape in 18 months with China’s economy improving and the U.S. looking to avoid the fiscal cliff driving optimism and stock markets up globally.
Two thirds surveyed described the global economy as either stable or improving with Investors selecting stocks and the equity market as the first choice of investments with real estate and the housing market and second for investment opportunities.
The U.S. came out on top for the eighth straight quarter when investors were asked which where they saw opportunities for the next year with China coming in as second to the U.S. and Europe as the worst place for investing. China was fourth in September according to Bloomberg survey of subscriber traders, investors and analysts.
“U.S. companies have better profit potential, balance sheets and access to capital,” Christian Thwaites, a poll respondent and president and chief executive officer in New York of Sentinel Investment, which manages more than $27 billion, said in an e-mail.
Expectation is that the U.S. will avert $607 automatic spending and tax cuts which is helping fuel the global optimism that President Barack Obamaand Congressional leaders will reach a short-term agreement to avoid the fiscal cliff.
Commodities are down 18 perent from September according to the last survey and forcasted to be the attractive asset expected to perfrom well over the next with the worst being U.S. Treasury bonds which forty-eight percent holders intend to sell bonds over the next six months.
“The global economy is improving, recovering and healing, thanks to the U.S. and the emerging markets,” said Andrea Guzzi, a poll respondent and vice president of IST Investmentstiftung fuer Personalvorsorge, which manages money for Swiss pension funds. “More people are becoming wealthy, less and less are poor.”
“People may not appreciate that when a foreigner comes and visits Hawaii that actually counts as a U.S. export,” Bernanke said before Congress on July 17 in response to a question from Senator Daniel Akaka, Democrat from Hawaii. “Tourism has been something of a bright spot. Not just in Hawaii, but in a number of places around the country.”
Spending by tourists is providing 13 ½ million jobs for Americans at a time when the unemployment rate is stuck above 8 percent. Spending by overseas visitors climbed 8.1 percent to $13.9 billion. U.S. Commerce Department show this includes all expenses from airfares to hotels over twelve months ending May.
July 18th’s Fed’s Beige Book survey of regional economies noted tourism was strong in several districts and that hotel rates and revenue per room was “robust” in New York, Richmond, Atlanta, Chicago and San Francisco and the locations relying less on discount to bring in tourist were seeing more visitors such as southern California and Hawaii.
Leisure and hospitality employees 13.59 million which currently accounts for 10.2 percent of all payrolls in the U.S. up from 9.8 percent before the recession according to Labor Department data.
Marriott International is up about 23 percent this year, the Walt Disney Co. has advanced 28 percent and Gaylord Entertainment Co., which operates the Grand Ole Opry in Nashville, Tennessee, has jumped 49 percent out performing the broader stock market Standard & Poor’s 500 Index up only 7 percent.
Federal Reserve Bank of New York President William C. Dudley said the city’s economy is “doing quite well” and has become less dependent on Wall Street. Tourism to New York has helped and has been “really quite a success story,” Dudley said in public remarks on May 30.
“Tourism has been an over-performer,” said Chris Lafakis, a senior economist at Moody’s Analytics Inc. in West Chester, Pennsylvania. “This is an industry that’s fully recovered from recession.”
- — Photo Courtesy of Bloomberg.com —
It was an easy win for Chancellor Angela Merkel.
Germany’s Lower-house lawmakers on summer break were called back and returned to Berlin on a rainy one day session to vote on Spain’s Bailout which was approved 473 to 97. The special session was to vote on recapitalizing Spain’s banks with 100 billion euros ($123 Billion). Germany, Europe’s largest economy, will guarantee almost 30 percent of the new euro zone aid package.
Merkel received help from Finance Minister Wolfgang Schaeuble who appealed to the lawmakers to aid Madrid who said the slightest perceived risk of Spanish insolvency could trip up the entire 17-nation euro zone.
“Any problems in the Spanish banking sector are a problem for the financial stability of the euro zone,” he said. In order to be able to commit Germany to the Spanish bailout in a conference call of euro zone finance ministers, Schaeuble needed the parliamentary approval.
Merkel must work within the limits set by government’s parliament, the Constitutional Court as well as heed to German public opinion while under intense pressure from the European Union partners to act in a timely manner to diffuse the crisis.
“Spain is the fourth biggest economy in the euro zone and a couple of its banks need to be stabilised. If we don’t do it, the country that suffers most is Germany, so it is in Germany’s interests to help Spain,” Andrea Nahles, deputy party leader for the main opposition Social Democrats (SPD), told Reuters.
The rescue opposition, Social Democrats, are agreeing if the rescue and liability lies with Spain directly and not through just the Spanish Bank. They do not support the direct recapitalization of the Spanish banks which the new ESM could resolve if and when it meets constitutional requirements.
“If the majority of us still vote in favour, this is only because in our view too the damage would be catastrophic if Germany denied aid to Spain,” Frank-Walter Steinmeier, parliamentary floor leader of the SPD, said ahead of the vote.
The court has delayed the entry into force of the ESM, the permanent rescue fund, pending a detailed legal review of whether it violates the German constitution. The court is due to deliver its verdict only on September 12.