Ireland Swallows Bitter Pill, Asks EU for Loan

Its economic miracle gone sour, Ireland follows Greece in seeking massive loan from EU, IMF

Debt-crippled Ireland formally applied Sunday for a massive EU-IMF loan to stem the flight of capital from its banks, joining Greece in a step unthinkable only a few years ago when Ireland was a booming Celtic Tiger and the economic envy of Europe.


European Union finance ministers quickly agreed in principle to the bailout, saying it "is warranted to safeguard financial stability in the EU and euro area." But all sides said further weeks of negotiations loomed to define the fund's terms, conditions and precise size.


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Greece Crisis: Germany Grapple Over Debt

By CHARLES FORELLE

Greece's prime minister lashed out Monday at Germany—its chief euro-zone benefactor—for tough talk on government-debt defaults, making clear the widening strains inside the 16-member euro-zone as the currency bloc wrestles with a teeming sovereign-debt crisis.



Addressing reporters in Paris, George Papandreou said the Germans' view—long-held, but recently reiterated—that private bondholders could suffer losses as part of a future bailout was intensifying government-debt woes.


The German position "created a spiral of higher interest rates for countries that seemed to be in a difficult position, such as Ireland or Portugal," Mr. Papandreou said. He added that the spiral could "break backs" and "force economies toward bankruptcy."


The sharp words reflect the severe difficulties the euro zone faces as it tries to shepherd its weaker members through an unstable period in which their access to borrowing from private markets is sharply curtailed.
Many in Europe—particularly in Germany—are wary of simply replacing that market financing with a blank check from other euro-zone taxpayers, hence the German insistence on finding others to take some of the losses. German leaders also believe that the tough-love approach will, in the long-term, give countries the incentive to live within their means.



"Our task is to anchor a new culture of stability in Europe," German Chancellor Angela Merkel said in prepared remarks for a party congress Monday.


A spokeswoman for Ms. Merkel said Monday the German chancellor's call for investors to bear a share of the burden in case of a euro-zone default in sovereign debt was made in reference to European Union discussions about new strategies for financial-crisis management that would not be implemented before 2013.
At the same time, the very fact that some countries are facing borrowing difficulties is spreading the problem to others and weakening the euro. That makes a speedy solution imperative.


Ireland, the country most acutely in crisis, is facing pressure to accept a bailout in order to stem the contagion, and a Portuguese minister speculated over the weekend that his country—another weak spot—may be forced to leave the euro zone.


In a bit of odd timing, Mr. Papandreou's remarks came as his own country released revised government-finance figures that made it more likely Greece would be unable to get out from under the crush of its own debt pile.



Greece said Monday it would miss a target to reduce its government deficit to 8.1% of gross domestic product this year, which was set after Greece took a €110 billion (€150 billion) bailout from euro-zone countries and the International Monetary Fund. (Germany put up €22 billion of that total.) As recently as last month, Greece said it would beat its target and report a deficit of 7.8%.


Instead, it now says the deficit is likely to be 9.4% this year, and that government debt would total 144% of GDP at the end of 2010. Citigroup economist Giada Giani said Greece's debt could reach 165% of GDP in 2013. At the time of the bailout, Greece agreed that its 2010 debt would be 133%, rising to 150% in 2013.



The bigger debt burden will increase Greece's annual interest tab. "A significantly higher debt profile inevitably makes the fiscal situation in Greece even more unsustainable than before," Ms. Giani wrote in a research note.
The revisions are in part the fruit of an effort to revamp Greece's poor record of making economic estimates and compiling government statistics. The 2009 deficit—also adjusted Monday from 13.6% of GDP to 15.4%—has been revised a half-dozen times. Greece now says it has finally seen the end of statistical revisions.


But the changes to the numbers also reflect a more fundamental problem: Greece is straining to bring in enough cash to close its budget gap sufficiently. Data from the Greek finance ministry show that revenue is up just 3.7% in the first 10 months of 2010, against the same period a year ago. The deal Greece inked in May as part of its bailout calls for full-year 2010 revenue to be up by 13.7%. That's now all but impossible, and Greek authorities have responded by imposing additional spending cuts to compensate. Analysts say Monday's new figures mean Greece will have to cut again.


—Alkman Granitsas, Amelie Baubeau, William Horobin and David Crawford contributed to this article.




source:http://online.wsj.com/article/SB10001424052748704584504575616033310586068.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsThird

Secret Walmart Survey Shows Inflation Already Here

CNBC.com | November 11, 2010 | 02:59 PM EST

Inflation is coming, in this report WalMart study has prove that statement. Because this inflation maybe the value of money will surge and the rate maybe up force that slump. Let's talk about it and the report says...... Here they are....

There might not have been a second round of quantitative easing, if Federal Reserve Chairman Ben Bernanke shopped at Walmart.

A new pricing survey of products sold at the world’s largest retailer showed a 0.6 percent price increase in just the last two months, according to MKM Partners. At that rate, prices would be close to four percent higher a year from now, double the Fed’s mandate.

The “inaugural price survey shows a small, but meaningful increase on an 86-item grocery basket,” said Patrick McKeever, MKM Partners analyst, in a note. Most of the items McKeever chose to track were every day items like food and detergent and made by national brands.

On November 3, the Fed announced its much-anticipated purchase of $600 billion in Treasury securities. An effort to keep market rates low since the central bank’s benchmark rate is already at zero. The Federal Open Market Committee’s statement said, “Currently, the unemployment rate is elevated, and measures of underlying inflation are somewhat low, relative to levels that the Committee judges to be consistent, over the longer run, with its dual mandate.”

But since that statement, interest rates have actually gone up, backfiring on a Fed chief who wants his quantitative easing to spark inflation of 2 percent annually. A moderate amount of inflation would be considered good for the economy. The problem is that inflation is already running well above a healthy level, investors said, Bernanke is just not looking in the right place, like a Walmart.

“I suspect that when the Chairman thinks about reflation he has a difficult time seeing any other asset besides real estate,” said Jim Iuorio of TJM Institutional Services. “Somehow the Fed thinks that if its not ‘wage driven’ inflation that it is somehow unimportant. It’s not unimportant to people who see everything they own (homes) going down in value and everything they need (food and energy) going up in price.”

Next week, the government is expected to say its official measure of inflation, the Consumer Price Index, increased at a 0.3 percent annual rate, according to economists’ consensus estimate. Core CPI, excluding food and energy, is expected to climb just 0.1 percent.

The biggest dollar increase in McKeever’s survey was on a jug of Tide Original laundry detergent, manufactured by Procter & Gamble [ PG 64.33  -0.03 (-0.05%) ]. Both P&G and Kimberly-Clark [ KMB 62.02  -0.13 (-0.21%) ] gave tentative forecasts for this quarter on concern they won’t be able to pass rising input costs on to the consumer. They may have no choice.

Prices of cotton, silver wheat, soybeans, corn are all up big this year. Cotton futures are up the most, climbing 90 percent so far in 2010. The price of silver is up 63 percent.

The purpose of McKeever’s note was actually not to be a commentary on Fed policy. The retail analyst is just trying to find out if Walmart is subtlety-increasing prices without decreasing foot traffic. A process he would deem bullish the stock.

“If the pricing dynamic is shifting, as our survey suggests, this would lend some upside bias to our sales and earnings expectations,” said McKeever.

Bernanke keeping interest rates artificially low is sparking outrage among central bank chiefs around the world, who feel the U.S. is essentially exporting inflation.

China’s CPI surged 4.4% in October, according to figures released Thursday, higher than economists’ expected and up from a 3.6 percent annual reading in the month prior.

Said EmergingMoney.com Founder Tim Seymour, “Bernanke definitely must not shop at WalMart in China.”

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