Its been an interesting 3 days with very little in the way of reports. Mortgage rates continue to drop and the world’s economic outlook continues to look like a sinking ship. Mortgage rates are dropping below 3.5%, the 10 year T-bill is below 1.5%, China’s economy is showing a huge slowdown and the Fed Open Market Committee minutes show that the Fed is ready to extend Operation Twist. Given the marginal success of Twist so far, it’s not much but it shows that the Fed is on top of things and will do whatever it can. The biggest concern? Deflation.
Here are some various economic pieces:
Spain is instituting many cost saving/revenue increasing measures and they are sparking protests throughout Spain. Included in the cuts/taxes are:
21% sales tax – from 18%.
A 63% reduction in the subsidy to the mining industry. To put that in perspective, Spain is currently subsidizing the industry to the tune of $52,000/employee throughout the industry. The cuts were scheduled to be implemented at 10% per year and instead 63% is be taken now.
Eliminated all end of year bonuses for state employees.
Lowered unemployment benefits.
And cut almost one third of the state officials on the councils of local authorities.
And to no one’s surprise, with the exception of the state officials losing their jobs (90% approval rating), 74% of the public disagrees with the other cuts.
Will Greece follow suit?
San Bernadino, Stockton and Mammoth Lake, California have all filed for bankruptcy.
China saw an unsettlingly large drop in their exports and imports as the slow down in the world economy takes it toll on their manufacturing.
Although many US real estate markets are suffering from lack of inventory, our foreclosure inventory is at record high levels. That impacts the housing recovery not only from the lack of inventory but from the damage it’s doing to lender’s balance sheets.
The dollar hit a 2 year high against the Euro.
There won’t be a Friday Financial this Friday as I’m off to Cape Cod to visit the beaches with all the white sharks. I’m going to try and eat fish, not be fish food.
Have a good end of week.
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