In Black Money, Frontline correspondent Lowell Bergman investigates
this shadowy side of international business, shedding light on
multinational companies that have routinely made secret payments — often
referred to as “black money” — to win billions in business. “The thing
about black money is you can claim it’s being used for all kinds of
things,” the British reporter David Leigh tells Bergman. “You get pots
of black money that nobody sees, nobody has to account for, … you can do
anything you like with. Mostly what happens with black money is people
steal it because they can.”
Leigh knows. In his groundbreaking reporting for The Guardian
newspaper, he helped uncover one of the biggest and most complicated
cases currently under investigation — a story involving a British
aerospace giant, the Saudi royal family, and an $80 billion
international arms deal known as Al Yamamah, or “The Dove” in Arabic.
“If there was one person who was the main man behind this arms deal, it
turned out it was the U.S. ambassador, Prince Bandar bin Sultan,” says
Leigh.
It all started back in 1985, when the charismatic Prince Bandar was
put in charge of acquiring new fighter jets for the Saudi Arabian air
force. The Israeli lobby in Congress reportedly stood in the way of the
United States making a deal with the Saudis, so President Ronald Reagan
sent Bandar to the British. The prince approached a willing Prime
Minister Margaret Thatcher, and they sealed the massive deal between the
United Kingdom, BAE Systems (formerly British Aerospace) and the Royal
Saudi Air Force.
Rumors swirled that billions in bribes had changed hands to secure
the deal, but British officials denied wrongdoing. “Of course there is
suspicion, and of course people are entitled to be suspicious,” says
Lord Timothy Bell, who was involved in the deal from the beginning on
behalf of the Thatcher government. “But as far as I’m concerned, if the
British government … and the Saudi government reached a sovereign
agreement over an arms contract that resulted in a tremendous number of
jobs in Britain, a great deal of wealth creation in Britain, … and
enabled Saudi Arabians to defend themselves, … I think that’s a jolly
good contract.”
Sunday, March 10, 2013
Forget the Good Jobs Report, Long-Term Unemployment Is Still Terrifying
There isn't a more urgent crisis than putting the long-term jobless back to work
(Reuters)
Jobs! The economy added 236,000 of them in February, which is good. And, as my colleague Derek Thompson
points out, it added more construction jobs than at any time since
March of 2007, which is even better. After all, housing is what makes recoveries go boom.
But let's be honest. Even with our nascent housing recovery,
the overall recovery is still leaving behind far too many for far too
long. People looking for work for 6-months or longer -- the long-term
unemployed -- jumped by 89,000 last month. It's been three years since
the labor market bottomed, but the long-term unemployment rate is still
higher than it's been at any point since 1948. Technically-speaking,
we're still in a deep hole.
Well,
that's not quite true. The hole is depressingly deep for the long-term
unemployed, but not so much for others. We increasingly have a
bifurcated labor market. As I pointed out back in December, the Boston Fed
has found that the job market looks normal for people who have been out
of work for less than 6-months, and horribly dysfunctional for people
who have been out of work longer than that. It doesn't matter how old
you are, or the industry you are in, or even how much education you have
-- the only thing that matters, as far as employers are concerned, is
how long you have been unemployed.
Why?
It's
about loss of skills, loss of trust, and loss of networks. The longer
people are out of work, the more they presumably forget. That's the loss
of skills. But even if that's not actually true, and it might not be,
employers assume it is -- there's a stigma to being out of work that
long. That's the loss of trust. Now, that's particularly hard for the
long-term unemployed to overcome since being unemployed for so long
hurts the kind of professional networks that are often so important to finding a job. The only way for the long-term unemployed to get a job is to already have one. It's a vicious catch-22.
In
other words, the long-term unemployed are at the back of the jobs line.
And it's quite a long line. As you can see below, the job calculator
from the Hamilton Project
estimates it would take us 8 years to get back to full employment at
our current 3-month average of 190,000 jobs-a-month. The long-term
unemployed will be unemployable by then.
It gets worse. As the Bipartisan Policy Center
points out, the sequester cuts long-term unemployment benefits by 10
percent. (And if you think those benefits are disincentivizing them from
finding work, ask yourself why there hasn't been any shift in the
Beveridge Curve for the shorter-term unemployed, who also get
benefits).
What is to be done? Well, as Megan McArdle argues,
the easiest way to put the long-term unemployed to work is ... to
directly put them back to work. In other words, the federal government
should become a hirer-of-last-resort for the long-term jobless -- or, at
the very least, create a hiring preference for them. It's probably the
fiscally conservative thing to do. Long-term unemployment isn't just an
individual tragedy; it's a collective one too. Left to linger, it
decreases our productive capacity and increases the strain on our safety
net.
It's no time to turn to the deficit. Not when so many people are still waiting for the recovery to show up for them.
Jobs numbers are far worse than they look - Millions who want full-time work can’t get it
by Mike "Mish" Shedlock - Prairie Grove, Ill.
Economists were surprised by the massive "beat" in Friday's reported job numbers.
The unemployment rate dropped 0.2 percentage points to 7.7% and the economy allegedly added 236,000 jobs.
But is that what really happened? Not really.
According to the household survey (on which the unemployment rate is based), the economy added a healthy 170,000 jobs.
The survey also shows a tremendous increase of 446,000 part-time jobs.
What this means is that the economy actually shed 276,000 full-time jobs.
The Bureau of Labor Statistics labeled those 446,000 part-time jobs as "voluntary,” but I am not so sure.
Read more: Why the unemployment rate is so misleading http://www.marketwatch.com/story/why-the-unemployment-rate-is-so-misleading-2013-03-08
A Gallup survey on jobs released Thursday shows the percentage of workers working part time but wanting full-time work was 10.1% in February,
an increase from 9.6% in January and the highest rate measured since January 2012.
Gallup notes "Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer.
In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time.
Although part-time work is clearly better than no work at all, these are not the types of good jobs that millions of Americans are still searching for.
‘Obamacare effect’
Obamacare is in play. Recall that under Obamacare, the definition of full-time employment is 30 hours. The BLS cutoff is 34 hours.
At 30 hours, companies gave to pay medical benefits so they have been slashing the number of hours people work.
This reduced the number of hours people worked and provided an incentive for many to take on an extra job.
We can see the effect in actual BLS data.
After declining for years, the percentage of those working two or more jobs is again on the rise.
In the past month there was a surge of 679,000 in the number of people working multiple jobs.
The seasonally-adjusted increase was 340,000.
One can look at the data two ways.
Either the economy is getting better and more jobs are available,
or people are working more jobs because their hours were cut and they need a second job.
Evidence suggests more of the latter than the former.
Look out below
The reported 236,000 surge in the establishment survey is not real.
It will be revised away. Here’s why:
In the household survey one is either working or not, thus multiple jobs do not distort the reported unemployment rate
(although there are many other distortions such as the participation rate and declining labor force).
The establishment survey, however, is distorted by people working multiple jobs.
A surge in multiple-job workers would artificially hike the baseline number.
I expect revisions later — huge downward revisions.
Economists were surprised by the massive "beat" in Friday's reported job numbers.
The unemployment rate dropped 0.2 percentage points to 7.7% and the economy allegedly added 236,000 jobs.
But is that what really happened? Not really.
According to the household survey (on which the unemployment rate is based), the economy added a healthy 170,000 jobs.
The survey also shows a tremendous increase of 446,000 part-time jobs.
What this means is that the economy actually shed 276,000 full-time jobs.
The Bureau of Labor Statistics labeled those 446,000 part-time jobs as "voluntary,” but I am not so sure.
Read more: Why the unemployment rate is so misleading http://www.marketwatch.com/story/why-the-unemployment-rate-is-so-misleading-2013-03-08
A Gallup survey on jobs released Thursday shows the percentage of workers working part time but wanting full-time work was 10.1% in February,
an increase from 9.6% in January and the highest rate measured since January 2012.
Gallup notes "Although fewer people are unemployed now than a year ago, they are not migrating to full-time jobs for an employer.
In fact, fewer Americans are working full-time for an employer than were doing so a year ago, and more Americans are working part time.
Although part-time work is clearly better than no work at all, these are not the types of good jobs that millions of Americans are still searching for.
‘Obamacare effect’
Obamacare is in play. Recall that under Obamacare, the definition of full-time employment is 30 hours. The BLS cutoff is 34 hours.
At 30 hours, companies gave to pay medical benefits so they have been slashing the number of hours people work.
This reduced the number of hours people worked and provided an incentive for many to take on an extra job.
We can see the effect in actual BLS data.
After declining for years, the percentage of those working two or more jobs is again on the rise.
In the past month there was a surge of 679,000 in the number of people working multiple jobs.
The seasonally-adjusted increase was 340,000.
One can look at the data two ways.
Either the economy is getting better and more jobs are available,
or people are working more jobs because their hours were cut and they need a second job.
Evidence suggests more of the latter than the former.
Look out below
The reported 236,000 surge in the establishment survey is not real.
It will be revised away. Here’s why:
In the household survey one is either working or not, thus multiple jobs do not distort the reported unemployment rate
(although there are many other distortions such as the participation rate and declining labor force).
The establishment survey, however, is distorted by people working multiple jobs.
A surge in multiple-job workers would artificially hike the baseline number.
I expect revisions later — huge downward revisions.
5 cities where houses are still cheap - Buyers can still find plenty of deals in distressed properties
Average REO sales price/Town
$-57,782 Cleveland
$111,260 Charlotte, N.C.
$124,555 Las Vegas
$149,094 Phoenix
$283,825 Santa Barbara, Calif.
Despite rising home prices in many markets, buyers can still find plenty of deals in foreclosures and other distressed properties.
In contrast, with distressed properties, buyers still can save hundreds of thousands of dollars. Working in their favor, in part, is that banks are more willing to unload homes as short sales than in previous years. Some banks are offering homeowners who are behind on mortgage payments cash in exchange for selling the home in a short sale. (Bank of America, for instance, has been offering as much as $30,000 to qualifying homeowners since last year.) That’s led to more short sales selling at a discount. And after years of a growing backlog of foreclosures, more of these listings are hitting the market, says Daren Blomquist, vice president with RealtyTrac, as courts process more of these cases. (Many states require court approval before a home can be repossessed by a bank.)
Experts warn that purchasing a distressed property is not typically an easy process. Buyers could end up waiting four months or longer to find out from a bank whether their offer on a short sale has been approved. And real-estate agents say bidding wars have intensified, with purchase prices of distressed homes often surpassing asking prices. In Charlotte, N.C., for instance, purchases of bank-owned properties (those that the banks have repossessed) increased 109% in the fourth quarter of 2012 from a year prior, according to RealtyTrac. Mike Hege, a real-estate agent with Pridemore Properties in Charlotte, says these homes often receive offers from 20 different buyers. Buyers should also consider the condition these properties are in and how much cash they’ll have to spend for repairs.
Even with such price pressures, buyers can find big discounts on distressed homes in several markets.
Here are five cities where homes are still cheap.
Cleveland
- Average REO sales price: $57,782
- Average discount vs. nondistressed sales: 56%
Cheap prices have helped give a boost to home sales in Cleveland. Buyers looking for rock-bottom prices turned to bank-owned properties — also known as real-estate owned or REO properties, homes that lenders repossessed after foreclosure — which were selling for less than $60,000 on average during the end of 2012, a 56% discount off regular listings in the city. During the fourth quarter of 2012, there was a 141% increase in buyers purchasing these properties from a year ago — the largest purchase spike for REOs nationwide, according to RealtyTrac.
Experts say deals are unlikely to go away soon. Home sales have been dropping since mid-2012, according to data from Trulia.com. And many existing homeowners are facing foreclosure. One in 10 homeowners in the Cleveland metro area was 90 days past due or in foreclosure in the fourth quarter, according to the Mortgage Bankers Association.
Of course, while real estate is cheap, buying property in Cleveland isn’t without risk. While the city’s unemployment rate is lower than the national average, job losses have contributed to home price declines.
Charlotte, N.C.
- Average REO sales price: $111,260
- Average discount vs. nondistressed sales: 43%
Sales of bank-owned properties shot up 109% in the fourth quarter of 2012, according to RealtyTrac. Real-estate agents say investors and individual buyers who want to occupy the homes are behind the sales. Hege, of Pridemore Properties, who specializes in REOs and short sales, says he sold roughly 20 bank-owned homes last year, about double the number in 2011.
Cheap pricing is creating an opportunity for buyers who are relocating from pricier markets, like New York and Boston, he says. After selling their homes, these buyers often have enough cash to buy a home outright in Charlotte, he says.
The state is also home to several other markets with big spikes in REO purchases, including Winston-Salem and Greensboro. According to RealtyTrac, those homes sold at an average discount of 49% and 40%, respectively, compared with regular listings during the fourth quarter.
Las Vegas
- Average short-sale price: $124,555
- Average discount vs. nondistressed sales: 33.4%
Despite being ground zero for the housing bust, there are a lot more short-sale listings to come to Las Vegas, says Paul Rowe, director of short sales at Shelter Realty, a real-estate brokerage based in Henderson, Nev. Nearly 8,000 homeowners in Vegas are currently in default on their mortgages, according to RealtyTrac — and their properties could turn into short sales or foreclosures. “[Short sales] aren’t going anywhere for another two to three years,” Rowe says.
That could give more options to buyers looking for a deal. There are roughly 16,600 listings in Las Vegas, down 24% from a year ago, according to the Department of Numbers, which tracks real-estate data. While that’s pushed up prices roughly 17% over the past year, prices could reverse course if there’s an influx of short-sale listings.
Phoenix
- Average short-sale price: $149,094
- Average discount vs. nondistressed sales: 37.84%
Buyers have been rushing into Phoenix in search of big deals. Short-sale purchases increased 43% during the fourth quarter of 2012 compared with a year prior, according to RealtyTrac. It’s not just investors who are behind the trend. Owner occupants are also competing for these properties. Given the competition, experts say, buyers looking to pick up a short sale will have a better shot if they come to the table with an all-cash offer.
But real-estate agents warn that the window of opportunity to snatch up distressed properties at real discounts is closing. Short-sale inventory is falling: There are currently 3,700 short-sale listings in Phoenix, down 56% from a year ago and down 76% from two years prior, says Brian North, cofounder of Green Street Realty, a boutique brokerage in Phoenix that specializes in short sales.
And buyers are more likely to encounter bidding wars, which will likely drive the purchase price up, he says. They should consider how much work the property will need in repairs to make sure that the short sale will be cheaper than buying a regular listing.
Santa Barbara, Calif.
- Average short-sale price: $283,825
- Average discount vs. nondistressed sales: 42.69%
Santa Barbara experienced the biggest increase in short-sale purchases, which rose 107% during the fourth quarter from a year prior, nationwide, according to RealtyTrac. Real-estate agents say buyers returned to the market late last year in search of deals as home prices appeared to bottom out: the median sales price of all properties in the city was roughly $600,000 at the end of 2012, down from about $700,000 in 2010 and approximately $800,000 in 2008, according to listings site Trulia.
Many of these buyers encountered limited inventory, so they broadened their search to short sales, says Rick Hannay, owner broker of Avalar Real Estate of Santa Barbara. In total, there were just 436 listings in Santa Barbara in December, down 20% from a month prior and down 31% from a year prior, according to Sotheby’s International Realty.
Buying short sales also came with another perk: bigger discounts. Short sales in this market sold at a 43% average discount compared with regular listings, according to RealtyTrac. The discounts could have been bigger were it not for bidding wars, says Hannay. It’s common for short sales to receive up to a dozen offers within their first few days on the market, he adds, which results in a purchase price that’s higher than the listing offer.
http://www.marketwatch.com/story/5-cities-where-houses-are-cheap-2013-03-08
$-57,782 Cleveland
$111,260 Charlotte, N.C.
$124,555 Las Vegas
$149,094 Phoenix
$283,825 Santa Barbara, Calif.
Despite rising home prices in many markets, buyers can still find plenty of deals in foreclosures and other distressed properties.
In contrast, with distressed properties, buyers still can save hundreds of thousands of dollars. Working in their favor, in part, is that banks are more willing to unload homes as short sales than in previous years. Some banks are offering homeowners who are behind on mortgage payments cash in exchange for selling the home in a short sale. (Bank of America, for instance, has been offering as much as $30,000 to qualifying homeowners since last year.) That’s led to more short sales selling at a discount. And after years of a growing backlog of foreclosures, more of these listings are hitting the market, says Daren Blomquist, vice president with RealtyTrac, as courts process more of these cases. (Many states require court approval before a home can be repossessed by a bank.)
Experts warn that purchasing a distressed property is not typically an easy process. Buyers could end up waiting four months or longer to find out from a bank whether their offer on a short sale has been approved. And real-estate agents say bidding wars have intensified, with purchase prices of distressed homes often surpassing asking prices. In Charlotte, N.C., for instance, purchases of bank-owned properties (those that the banks have repossessed) increased 109% in the fourth quarter of 2012 from a year prior, according to RealtyTrac. Mike Hege, a real-estate agent with Pridemore Properties in Charlotte, says these homes often receive offers from 20 different buyers. Buyers should also consider the condition these properties are in and how much cash they’ll have to spend for repairs.
Even with such price pressures, buyers can find big discounts on distressed homes in several markets.
Here are five cities where homes are still cheap.
Cleveland
- Average REO sales price: $57,782
- Average discount vs. nondistressed sales: 56%
Cheap prices have helped give a boost to home sales in Cleveland. Buyers looking for rock-bottom prices turned to bank-owned properties — also known as real-estate owned or REO properties, homes that lenders repossessed after foreclosure — which were selling for less than $60,000 on average during the end of 2012, a 56% discount off regular listings in the city. During the fourth quarter of 2012, there was a 141% increase in buyers purchasing these properties from a year ago — the largest purchase spike for REOs nationwide, according to RealtyTrac.
Experts say deals are unlikely to go away soon. Home sales have been dropping since mid-2012, according to data from Trulia.com. And many existing homeowners are facing foreclosure. One in 10 homeowners in the Cleveland metro area was 90 days past due or in foreclosure in the fourth quarter, according to the Mortgage Bankers Association.
Of course, while real estate is cheap, buying property in Cleveland isn’t without risk. While the city’s unemployment rate is lower than the national average, job losses have contributed to home price declines.
Charlotte, N.C.
- Average REO sales price: $111,260
- Average discount vs. nondistressed sales: 43%
Sales of bank-owned properties shot up 109% in the fourth quarter of 2012, according to RealtyTrac. Real-estate agents say investors and individual buyers who want to occupy the homes are behind the sales. Hege, of Pridemore Properties, who specializes in REOs and short sales, says he sold roughly 20 bank-owned homes last year, about double the number in 2011.
Cheap pricing is creating an opportunity for buyers who are relocating from pricier markets, like New York and Boston, he says. After selling their homes, these buyers often have enough cash to buy a home outright in Charlotte, he says.
The state is also home to several other markets with big spikes in REO purchases, including Winston-Salem and Greensboro. According to RealtyTrac, those homes sold at an average discount of 49% and 40%, respectively, compared with regular listings during the fourth quarter.
Las Vegas
- Average short-sale price: $124,555
- Average discount vs. nondistressed sales: 33.4%
Despite being ground zero for the housing bust, there are a lot more short-sale listings to come to Las Vegas, says Paul Rowe, director of short sales at Shelter Realty, a real-estate brokerage based in Henderson, Nev. Nearly 8,000 homeowners in Vegas are currently in default on their mortgages, according to RealtyTrac — and their properties could turn into short sales or foreclosures. “[Short sales] aren’t going anywhere for another two to three years,” Rowe says.
That could give more options to buyers looking for a deal. There are roughly 16,600 listings in Las Vegas, down 24% from a year ago, according to the Department of Numbers, which tracks real-estate data. While that’s pushed up prices roughly 17% over the past year, prices could reverse course if there’s an influx of short-sale listings.
Phoenix
- Average short-sale price: $149,094
- Average discount vs. nondistressed sales: 37.84%
Buyers have been rushing into Phoenix in search of big deals. Short-sale purchases increased 43% during the fourth quarter of 2012 compared with a year prior, according to RealtyTrac. It’s not just investors who are behind the trend. Owner occupants are also competing for these properties. Given the competition, experts say, buyers looking to pick up a short sale will have a better shot if they come to the table with an all-cash offer.
But real-estate agents warn that the window of opportunity to snatch up distressed properties at real discounts is closing. Short-sale inventory is falling: There are currently 3,700 short-sale listings in Phoenix, down 56% from a year ago and down 76% from two years prior, says Brian North, cofounder of Green Street Realty, a boutique brokerage in Phoenix that specializes in short sales.
And buyers are more likely to encounter bidding wars, which will likely drive the purchase price up, he says. They should consider how much work the property will need in repairs to make sure that the short sale will be cheaper than buying a regular listing.
Santa Barbara, Calif.
- Average short-sale price: $283,825
- Average discount vs. nondistressed sales: 42.69%
Santa Barbara experienced the biggest increase in short-sale purchases, which rose 107% during the fourth quarter from a year prior, nationwide, according to RealtyTrac. Real-estate agents say buyers returned to the market late last year in search of deals as home prices appeared to bottom out: the median sales price of all properties in the city was roughly $600,000 at the end of 2012, down from about $700,000 in 2010 and approximately $800,000 in 2008, according to listings site Trulia.
Many of these buyers encountered limited inventory, so they broadened their search to short sales, says Rick Hannay, owner broker of Avalar Real Estate of Santa Barbara. In total, there were just 436 listings in Santa Barbara in December, down 20% from a month prior and down 31% from a year prior, according to Sotheby’s International Realty.
Buying short sales also came with another perk: bigger discounts. Short sales in this market sold at a 43% average discount compared with regular listings, according to RealtyTrac. The discounts could have been bigger were it not for bidding wars, says Hannay. It’s common for short sales to receive up to a dozen offers within their first few days on the market, he adds, which results in a purchase price that’s higher than the listing offer.
http://www.marketwatch.com/story/5-cities-where-houses-are-cheap-2013-03-08
Dr Doom Roubini sees market correction in 2nd half of 2013
Dr Doom says the U.S. fiscal drag will eventually catch up with the stock market.
In a CNBC interview on Friday, economist Nouriel Roubini, who is known for his pessimistic outlooks,
hence earning his nickname (Remember, he called the global financial crisis back in 2006), says investors should prepare for disappointment later this year.
Speaking at an international economic conference, the Ambrosetti Forum, held on the shores of Lake Como, Italy (poor guy),
Roubini warned that higher taxes and spending cuts will knock U.S. economic growth this year.
“Payroll taxes, taxes for the rich, are going to significantly reduce disposable income, and retail sales have been a disaster,” Roubini said.
Well he must be pretty concerned, because he said something similar to Bloomberg last week.
He also gave an interview to Bloomberg News on Friday in which he predicted a bigger economic bubble coming in 2013 than 2004.
“And there are already signals of consumption growth slowing down, as well as the sequester,
and the fiscal drag this year will be 1.5% of [gross domestic product] for an economy that was barely growing last year,” he told CNBC.
At best, the U.S. economy will grow 1.5% in 2013, Roubini predicted.
And ever the party pooper, he said markets could ultimately get a shock from the scale of the slowdown in the U.S. economy later in the year.
The Dow Jones Industrial Average notched another record high Thursday.
“I think that the market is going to be surpised by how much the U.S. is going to slow down, even compared to last year,” Roubini said.
TWEET 6:44 AM - 08 Mar 13 Nouriel Roubini @Nouriel
The weather is cloudy & gloomy at the Ambrosetti Forum on the Lake of Como. Just like the Italian political climate
As a result, his baseline estimates for earnings and revenue growth point to disappointment in the second half of the year.
“The U.S. stock market could correct somehow,” said Roubini.
He made similar comments to Bloomberg News.
He said there was a bigger economic bubble coming in 2013 than 2004.
Similar comments were heard on Friday from a Nordea Bank senior strategist.
Henrik Drusebjerg told MarketWatch that financial markets seem a bit detached from what’s going on politically:
“In a low-growth environment, ignoring that this [sequester effects] is in front of us,
I’m a bit surprised to see both sentiment indicators and real data being as positive as it is,
and also seeing financial markets keep on climbing as if there were no tomorrow.
What I fear is in the coming months weeks we will get some of a reality check on numbers because sequester will showing effects.”
It could also be (though not likely) that the weather was getting Roubini down — 50 degrees and chilly down on Lake Como right now.
In a CNBC interview on Friday, economist Nouriel Roubini, who is known for his pessimistic outlooks,
hence earning his nickname (Remember, he called the global financial crisis back in 2006), says investors should prepare for disappointment later this year.
Speaking at an international economic conference, the Ambrosetti Forum, held on the shores of Lake Como, Italy (poor guy),
Roubini warned that higher taxes and spending cuts will knock U.S. economic growth this year.
“Payroll taxes, taxes for the rich, are going to significantly reduce disposable income, and retail sales have been a disaster,” Roubini said.
Well he must be pretty concerned, because he said something similar to Bloomberg last week.
He also gave an interview to Bloomberg News on Friday in which he predicted a bigger economic bubble coming in 2013 than 2004.
“And there are already signals of consumption growth slowing down, as well as the sequester,
and the fiscal drag this year will be 1.5% of [gross domestic product] for an economy that was barely growing last year,” he told CNBC.
At best, the U.S. economy will grow 1.5% in 2013, Roubini predicted.
And ever the party pooper, he said markets could ultimately get a shock from the scale of the slowdown in the U.S. economy later in the year.
The Dow Jones Industrial Average notched another record high Thursday.
“I think that the market is going to be surpised by how much the U.S. is going to slow down, even compared to last year,” Roubini said.
TWEET 6:44 AM - 08 Mar 13 Nouriel Roubini @Nouriel
The weather is cloudy & gloomy at the Ambrosetti Forum on the Lake of Como. Just like the Italian political climate
As a result, his baseline estimates for earnings and revenue growth point to disappointment in the second half of the year.
“The U.S. stock market could correct somehow,” said Roubini.
He made similar comments to Bloomberg News.
He said there was a bigger economic bubble coming in 2013 than 2004.
Similar comments were heard on Friday from a Nordea Bank senior strategist.
Henrik Drusebjerg told MarketWatch that financial markets seem a bit detached from what’s going on politically:
“In a low-growth environment, ignoring that this [sequester effects] is in front of us,
I’m a bit surprised to see both sentiment indicators and real data being as positive as it is,
and also seeing financial markets keep on climbing as if there were no tomorrow.
What I fear is in the coming months weeks we will get some of a reality check on numbers because sequester will showing effects.”
It could also be (though not likely) that the weather was getting Roubini down — 50 degrees and chilly down on Lake Como right now.
$36 Billion of Military Hardware Could Be Destroyed in Afghan Pullout
The Obama White House is cutting $65 billion in the sequester, but it
could easily leave or torch 750,000 pieces of major military hardware —
worth $36 billion — in Afghanistan after U.S. troops pull out by the end
of next year.
Here are the options, according to Face the Facts USA of the George Washington University: Leave the equipment — or destroy it — in Afghanistan; move it to other U.S. military outposts; or transfer it to another U.S. agency or to another country.
The estimated cost for the latter two options: $5.7 billion.
The equipment includes trucks, aircraft, and armored vehicles — most of which are controlled by the Army.
Because the Afghanistan terrain is mountainous and landlocked, transport would be difficult. But leaving it behind intact could put the equipment in the wrong hands.
So, is it best to torch $36 billion in U.S. military assets?
Urgent: Obama or GOP: Who’s to Blame for Budget Crisis? Vote Now
Here are the options, according to Face the Facts USA of the George Washington University: Leave the equipment — or destroy it — in Afghanistan; move it to other U.S. military outposts; or transfer it to another U.S. agency or to another country.
The estimated cost for the latter two options: $5.7 billion.
The equipment includes trucks, aircraft, and armored vehicles — most of which are controlled by the Army.
Because the Afghanistan terrain is mountainous and landlocked, transport would be difficult. But leaving it behind intact could put the equipment in the wrong hands.
So, is it best to torch $36 billion in U.S. military assets?
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