World Crisis (is not over)

[Baltman]

January 14, 2010

USA - Retail sales fell in December, the government reported Thursday, putting a damper on hopes that the holiday shopping season was strong.

The Commerce Department said total retail sales fell 0.3% to $353 billion last month, compared with November's upwardly revised 1.8% jump. Economists surveyed by Briefing.com had anticipated that December sales would grow 0.5%.

The number of Americans filing for initial unemployment insurance rose more than expected last week, the government said Thursday.

There were 444,000 initial job claims filed in the week ended Jan. 9, up 11,000 from a revised 433,000 the previous week, the Labor Department said in its weekly report.

[Baltman]

But on the other side:

January 14, 2010

Intel's profit beats Wall Street expectations

Intel Corp. posted a fourth-quarter profit that trounced Wall Street expectations Thursday, as the world's largest microchip maker became the first major technology company to report results for the period.

California -based company reported a profit of $2.3 billion, or 40 cents per share, during the final quarter of 2009. The income was nearly 10 times higher than the $234 million, or 4 cents per share, that Intel reported for the fourth quarter of 2008.

[Baltman]

Tech job cuts hit 4-year high

USA - Planned job cuts at tech companies rose in 2009 for the second straight year, hitting the highest level in four years, according to a report released Tuesday.

Outplacement firm Challenger, Gray & Christmas Inc. reported that tech sector employers announced 174,629 job cuts in 2009. That's a 12.3% increase from cuts announced in 2008, and the highest total since 2005.

[Baltman]

Euro Zone Faces Zero Growth, US Facing Trouble: Nouriel Roubini (the man who predicted crisis)

The euro zone is facing a period of zero growth if not recession, and the United States is heading for financial trouble, U.S. economist Nouriel Roubini was quoted as saying on Saturday.

There was a risk of renewed recession in Europe, Roubini said in an interview with Swiss daily Tages-Anzeiger.

"There is that risk, at least for the euro zone. Growth will fall toward zero. Even if that is perhaps not a real recession, it will feel like one. Greece was just the tip of the iceberg," he said.

"And the Americans too will run into the wall at some point if the carry on the way they are," he said in the interview published in German.

Roubini, known as Dr. Doom and best known for predicting the U.S. housing crisis, said there was a risk of a second financial crisis, with countries becoming insolvent and being forced out of the euro, and banks collapsing.

Countries such as Spain and Greece were now under pressure to cut spending and raise taxes to retain access to the capital markets, even though they had no growth to speak of.

If governments implement austerity measures too soon they risk snuffing out demand and recovery, but delays could provoke a catastrophe with high interest burdens and inflation.

"You're damned if you save and you're damned if you don't," he said.

Roubini said it was "possible to square this circle" if governments committed to a credible medium-term plan to restore their budgets.

But such policies, which carry the risk of a deflationary recession, must be compensated for with a loose pan-European monetary policy to stimulate demand.

Any resulting further decline in the euro would make European exports more competitive and allow Germany to raise wages and purchasing power at home to stimulate exports from other euro zone countries, he said.

Roubini said that a Japanese-style period of deflation, stagnation and high unemployment was a much greater risk to Europe for the next two or three years than inflation.

2010, Reuters.