Because of this agreement, every working American will keep his or her tax cut ? about $1,000 for the average family. That?s about $40 in every paycheck. Vital unemployment insurance will continue for millions of Americans who are looking for work. And when Congress returns, I urge them to keep working to reach an agreement that will extend this tax cut and unemployment insurance for all of 2012 without drama or delay.
This is good news, just in time for the holidays. This is the right thing to do to strengthen our families, grow our economy, and create new jobs. This is real money that will make a real difference in people?s lives. And I want to thank every American who raised your voice to remind folks in this town what this debate was all about. It was about you. And today, your voices made all the difference.
All smiles: House Speaker John Boehner had refused to back the compromise bill from the Senate. Mr Boehner's decision to back down is a victory for President Obama.
22.15 In Moody's speak:
The second driver of Moody's rating decision is the significant increase in the medium-term risks to economic growth, beyond any normal cyclical adjustment, in the small and very open Slovenian economy. This is in part driven by the deleveraging under way across the euro area financial, corporate, household and government sectors, and its adverse impact on Slovenia's export demand and funding conditions for Slovenian banks.
The third driver of today's rating action are the heightened risks posed by the sustained deterioration in government funding conditions in the euro area. Moody's recognizes that the government has already pre-financed in 2011 the bulk of the roughly EUR 2.8 billion refinancing needs in 2012 through the recent sale of treasury bonds and the availability of cash reserves.
22.10 The ratings agency said the downgrade was due to increasing pressure on the Slovenian government's balance sheet from the possibility of having to shore up its banks, as well as continuing eurozone woes.
Slovenia has just been downgraded by Moody's to A1, from Aa3.
21.41 While Standard & Poor's continues to be a little too trigger happy with its downgrade button, more serious developments are happening in Congress over payroll taxes. Raf Sanchez brings us the latest from Washington:
For the last three days, House Speaker John Boehner has been holding out and refusing to back a compromise bill from the Senate that would prevent payroll taxes from rising on January 1 and hitting the pay cheques of 160 million workers.
Boehner has been demanding that the tax cut be extended for a full year but the Senate was only able to agree on a two month extension. Word from Capitol Hill is that, under increasing pressure from both inside and outside of the party, Boehner has now caved and is prepared to accept the compromise bill.
If confirmed, and we're expecting a formal announcement at 10pm GMT, then it's a major political victory for President Obama and good news for the still faltering American economy.
21.15 US markets have now closed, and stocks scored solid gains in thin pre-Christmas trade, helped by encouraging data on the jobs market.
20.44 It seems that Standard & Poor's hasn't downgraded Goldman Sachs after all. They just accidentally said that they had on their website. Again.
This has echoes of November 10, when the ratings agency announced it had downgraded France, then sheepishly had to admit that it was all a terrible mistake.
As you were...
20.14 Standard & Poor's has cut Goldman Sach's credit rating from AA- to A+. We'll bring you more on that as we have it...
19.56 Hungarian PM Viktor Orban has told EC head Jose Manuel Barroso that he won't consider dropping proposed laws to reform the way his country's central bank operates, in a letter including "a polite but negative answer".
19.25 We mentioned earlier on (16.49) that Mervyn King was concerned about the eurozone economy, but he still has time to crack the occasional joke...
18.55 A quick update on the US markets, which have continued climbing. The Dow Jones is up 0.56pc, the S&P 500 has gained 0.85 and the Nasdaq is 0.86pc higher.
18.12 President Obama has just spoken in Washington, blaming ?a faction of House Republicans? for standing in the way of a temporary extension of a payroll tax cut:
As a reward The Daily Telegraph has treated the City desk to a batch of lurid and delicious cupcakes. A big thank you from us bloggers...
17.14 More from Mervyn King: he said that the warning lights for Europe's financial system were "flashing red".
16.49 Bank of England governor Mervyn King is speaking in Frankfurt at the moment, following a meeting of the European Systemic Risk Board (ESRB).
He says that the group hasn't discussed the possibility of a single country leaving the eurozone. He added that if any banker thinks in the future that they are too big to fail, they are "very much mistaken".
16.45 European markets are now closed, having risen on the back of mostly upbeat US economic data, and with banks gaining after taking advantage of cheap finance offered by the ECB.
David Jones, chief market strategist at IG Index, said:
Angus Campbell, head of sales at Capital Spreads, said:
16.12 The ECB has hit out at Hungary's controversial plans for a radical shake-up in the way it runs its own central bank, the MNB.
In a statement the ECB expressed concern about a draft law that could "undermine the central bank's independence". That concept is enshrined in EU treaties, but Hungarian PM Viktor Orban hopes to use his majority in parliament to push through changes.
The ECB said it was particularly concerned about the proposed changes to the monetary policy council. Orban wants to increase the number of council members and also increase the number of deputy governors, effectively increasingly parliament's influence over the setting of interest rates.
The ECB said such an increase in numbers "without due consideration of the MNB's needs, gives rise to concern as to whether this could be used to influence the decision-making process, to the detriment of central bank independence."
15.32 We have some more detail on Italy's new ?33 billion austerity plan, which includes a range of tax hikes and spending cuts:
? New tax on first homes, increase in rates for second houses.
? A 2 percentage point hike in VAT from October next year.
? Tax on money brought back to Italy under "shields" for tax evaders.
? Tax on bank accounts, shares and financial instruments.
? Increase in excise duty on petrol.
? Tax increase on luxury assets: boats, aeroplanes and sports cars.
? Cuts to funding for city councils of ?1.45 billion per year.
? Minimum retirement age for womens' pensions raised to 62 from 60. Mens' minimum retirement age to rise to 66 from 65.
15.09 As we mentioned earlier, today is the 100th day of The Daily Telegraph's debt crisis blog. It's been a rollercoaster ride, but we'd like to know what your defining moment was:
14.45 US markets have just opened, rising in early trading following encouraging signs that the economy was growing at a faster rate than earlier in the year and fewer people are applying for unemployment benefits. The number of Americans applying for unemployment benefits dropped last week to its lowest level since April 2008.
14.33 Speaking before the vote, Mario Monti said:
The choices made by all the members of the European Union have to be to pursue the objective of stable growth, employment and cohesion.
There is still enormous work to be done to free the Italian economy from the brakes that have held back growth for too long.
14.25 We weren't expecting this so soon this afternoon, but Italian senators have adopted a package of austerity measures including tax increases and pension reforms aimed at averting bankruptcy.
The approval came in a confidence vote called by Prime Minister Mario Monti's government in order to speed up approval and prevent what he calls a Greek-style scenario in which Italy would need a debt bailout.
Perhaps the Italian parliament was keen to wrap things up early and head off home for Christmas...
14.15 The ECB has expressed 'concern' over the independence of the Hungarian central bank.
13.59 Bill Gross from top bond manager PIMCO:
13.56 Here's a breakdown of US GDP:
(You can see bigger versions of these graphs by clicking the right-hand-side of the main picture at the top of this blog).
13.46 Greece?s state budget deficit in the 11 months to the end of November widened to ?20.5bn compared with ?19.5bn in the same period a year earlier, according to final figures released by e-mail from the Athens-based Finance Ministry.
Ordinary budget revenue declined 3pc to ?43.9bn while spending rose 6.2pc, or by ?3.7bn, the e-mail said.
13.31 BREAKING NEWS...
US GDP fell to 1.8pc in the third quarter from 2pc in the second. Jobless claims at 364k (lowest in three-and-a-half years) against 368k and continuing claims fall to 3546k against 3625k.
13.20 Quick piece of corporate news: Societe Generale's investment banking chief has stepped down.
13.19 And the Telegraph's head of business Damian Reece has commented on today's UK GDP figures: UK GDP figures are more cod's roe than caviar
And here is some reaction from Rachel Reeves, shadow Treasury chief secretary:
12.56 What can you buy with 0.1pc of the UK's GDP? The Telegraph's Anna White finds out.
One and a half airlines - if International Airlines Group's ?172.5m offer for BMI this morning is anything to go by... [or] 10 million Heston Blumenthal turkey kits - Waitrose prices start at ?25.
12.47 Ed Balls, shadow Chancellor, has rejected the idea of another Labour tax-and-spend bonanza:
12.38 Business is booming at John Lewis. Sales have risen 20.7pc year-on-year in the four days to December 21, albeit against a snow-hit period last year.
12.28 Update on the markets:
FTSE 100 +1.2pc
CAC +1.4pc
DAX +1.2pc
IBEX +0.9pc
MIB +1.4pc
12.20 ECB deposit facility as of December 21: ?265bn (+?15bn).
12.08 The war of words with Britain is over, says French foreign minister Alain Jupp?:
"The comments [of the past few days] went further than their authors wished, [but there is] no need for excuses on either side. There is not an ounce of doubt that Franco-British relations will become excellent once again as we have too much in common to allow them to deteriorate. I cannot imagine that we will push Britain out of the European Union.
12.01 Good news! Latvia's three-year ?7.5bn bailout program that helped the Baltic country avert bankruptcy has come to an end.
Latvia's government says it used only ?4.4bn - or nearly 60pc - of the loan, which was provided by the European Union, the International Monetary Fund, and the World Bank.
Prime Minister Valdis Dombrovskis praised Latvians, saying they weathered the greatest crisis in the country's history.
Latvia's economy suffered one of the worst collapses in the world, with output shrinking 23pc over 2008-2010 and unemployment reaching nearly 25pc.
11.58 After protests in the UK and Belgium recently, the Greeks have demonstrated that their outrage at taxes hasn't died.
Hearse owners have taken part in a protest drive through the center of Greece's two main cities - Thessaloniki and Athens - complaining that a sharp rise in annual road taxes could put them out of business.
The protesters say their cars have been reclassified as private instead of business vehicles, obliging them to pay up to six times more in road tax by the end of next week for 2012.
11.55 Now the Pope has waded into the eurozone debt crisis, calling it an "ethical crisis".
"As this year draws to a close, Europe is undergoing an economic and financial crisis, which is ultimately based on the ethical crisis looming over the Old Continent. Such values as solidarity, commitment to one's neighbour and responsibility towards the poor and suffering are largely uncontroversial. [But] the motivation is often lacking for individuals and large sectors of society to practise renunciation and make sacrifices."
11.46 Further to our emigration story (see 06.34), Angela Merkel has insisted that the eurozone's sinner states must save and work their way out of the crisis - but will she give them a job?
Data just out from Germany's statistics office show that immigration from struggling EU countries into Germany has surged during the crisis.
The number of Greek immigrants into Germany soared 84pc in the first six months of 2011; and there was a 49pc increase in the number of Spannish immigrants. In total 67,000 more foreigners arrived in Germany than during the same period last year.
"It's striking to see the strong rise in immigration from European Union countries particularly hard-hit by the financial and debt crises," the office said, according to Reuters.
11.40 Italian PM Mario Monti, who faces a confidence vote that he called to speed up final approval of a ?33bn austerity package aimed at restoring confidence in the country's economy. He has just said that yesterday's ECB action "goes in the right direction to restore confidence" and will favour credit flow to the whole European economy.
He adds that it is essential Italians buy government bonds and that the country's public debt is balanced by household wealth. He believes Italy cannot have growth without financial discipline and says his country will bring a contribution to stability with a budget surplus.
11.36 So it's not just the Brits who are against Merkozy's planned Financial Transaction Tax (FTT), seems the Dutch don't see the point either. I've just seen a report by the CPB - Netherland's Bureau for Economic Policy Analysis, which feeds economic forecasts to the Dutch cabinet and government. Here's their view on the controversial tax:
11.25 Further to our cost of Christmas dinner entry (see 10.44), Ferratum, Europe?s biggest online microloan lender, has revealed that more than four times as many people applied for a payday loan in the past two weeks than in the whole of November.
Ferratum, which operates in 18 countries after launching this month in Australia, has seen rapid growth since opening for business in the UK in July.
But even if you bought items you might not get them in time for Christmas - Sainsbury's confirms some home deliveries will not be made.
11.21 At last, some good news. Druids said the omens are good that 2012 will be an excellent year after the sun shone on Stonehenge during a dawn ceremony to mark the winter solstice today.
Will George Osborne, Mario Draghi, Angela Merkel and her little friend Nicolas Sarkozy take heart from this?
11.17 Bill O'Neill, chief investment officer at EMEA Merrill Lynch Wealth Management, looks ahead to investing in 2012:
11.05 A new survey of more than 1,000 members of the Institute of Directors conducted after the recent EU summit has revealed strong support among business leaders for both the Prime Minister?s veto and for a looser relationship with the EU.
The key findings of the survey are that 77pc of IoD members agree with the Prime Minister?s use of the veto at the EU summit, including 46pc strongly agreeing. 63pc of IoD members would like to see the UK in a looser relationship with the EU.
10.50 We are hearing that a suspicious package has been delivered to the Italian Stock Exchange. Giorgio Ciconali, a health official for the Lombardy region, said the package was discovered in the last 24 hours. Police and fire department officers, including hazardous materials specialists, are outside the stock exchange. A spokeswoman for the exchange said the bourse?s offices weren?t evacuated.
10.44 The ONS has revealed that the average cost of some of the items needed for a Christmas dinner has risen by as much as 50pc in a year.
The cost of turkey steaks has risen from an average price of ?7.85 per kg last November to ?8.15 per kg this November, an increase of 3.8pc.
The picture on vegetables is mixed. The prices of carrots (-20.5pc), old potatoes (-10.4pc) and new potatoes (-9pc) have all dropped, but broccoli (+4.4pc), cauliflower (+6.3pc) and frozen peas (+4.6pc) have all risen.
The ingredients for pigs in blankets have both gone up. The average cost of back bacon has risen from ?8.58 to ?9.11 per kg, with the cost of pork sausages rising from ?4.10 to ?4.33 per kg.
Cream crackers to accompany a cheese course have risen by the most, increasing from 55p to 83p, a rise of 50.9pc.
10.34 Economists have been reacting to the surprise rise in UK GDP.
Howard Archer, chief UK and European economist, IHS Global Insight
Indeed, the component breakdown of the third-quarter GDP data still hardly makes encouraging reading although it is a bit better than previously indicated as business investment has been revised up to show modest growth.
George Buckley, Deutsche Bank
The mix of domestic demand looks a little bit better, but we've still got very weak consumption and that remains an issue. The current account figures are exceptionally volatile.
10.19 S&P has downgraded Hungary to BB+/B on "unpredictable policy framework".
The country will also pay ?650m to the IMF in February.
10.15 Further to the Guardian's story today on Greek emigration (see 06.34), the World Bank has said that 1.21m Greeks left the country in 2010... that's 10.8pc of the population.
A Greek debt deal is reportedly just days away.
10.11 Quick update on the markets:
FTSE 100 +1.2pc (boosted by upward revision of GDP - see 09.30)
CAC +1.4pc
DAX +1.5pc
IBEX +1pc
MIB +1.5pc
10.06 We are hearing reports that the Bank of Italy pressed local lenders into tapping ECB funds yesterday for more than they needed.
Echoes of the TARP funds forced on US banks?
10.00 Just 9pc of Britons expect their local economy to improve in the next six months, half the level seen in America, according to new research from Ipsos? Global @dvisor online survey - conducted in 24 countries. Only the Hungarians (6pc), Japanese (6pc), Belgians (4pc) and the French (2pc) are more pessimistic about the future of their local economy.
Even the Spanish are more optimistic than Britons (17pc). By the far the most optimistic of the 24 countries are the Brazilians, with 72pc expecting improvement.
Just 10pc of UK citizens described the British economy as "good", compared with 72pc of Swedes that describe their economy as good and 64pc of Germans.
09.55 Hungary, which saw EC and IMF talks over a standby credit line cut short earlier this month, will hold fresh meetings with the organisations in January.
09.42 Those nice people at the Office for National Statistics have put together a video that explains how, in 2010, there was ?48.6bn more debits from the UK than credits coming in, driven by imports:
BREAKING NEWS...
09.30 UK GDP revised up to 0.6pc from 0.5pc in the third quarter (month-on-month). Production up 0.2pc, services up 0.7pc and construction up 0.3pc. Annual rate flat.
Real household disposable income rose by 0.3pc. Now up 1.6pc in the past six months.
09.28 Peter Bofinger, a member of Chancellor Angela Merkel's council of economic advisers, has said that the future of the euro will be decided in the next six months. He added that the single currency has "no future" unless Germany changes its stand.
09.24 Fancy a million-pound present this Christmas? Most of Spain does, and its citizens have the chance to win up to ?3.36m in the annual ?1.26bn El Gordo Christmas lottery.
A group of people assist the traditional Spanish National Lottery 'El Gordo' dressed as houses - the Christmas Lottery has highest jackpot in its history
A single El Gordo ticket costs ?200 (?168).
09.09 The UK isn't the only country struggling with festive strikes. A 24-hour pre-Christmas public sector strike to protest pension reform has hit rail and bus traffic across Belgium. The action was taken after the government confirmed plans to make people wait two more years before they can take early retirement, and other measures to get a handle on the pensions budget. The reforms are part of a slate of austerity measures approved by Prime Minister Elio Di Rupo's coalition to get Belgium out of an economic crisis.
09.06 We are expecting the final UK GDP revision figure at 9.30am. We'll have the latest here.
09.04 Paul Krugman, in the New York Times, writes:
"[IMF chief economist] Blanchard?s blog post on what went wrong in 2011 is, in fact, totally sensible and on point. Furthermore, if I am reading it right, it contains something of a bombshell: 'Some preliminary estimates that the IMF is working on suggest that it does not take large multipliers for the joint effects of fiscal consolidation and the implied lower growth to lead in the end to an increase, not a decrease, in risk spreads on government bonds.'
"If I have this right, Olivier is suggesting that harsh austerity programs may be literally self-defeating, hurting the economy so much that they worsen fiscal prospects.
"This in turn means that the analogy to medieval doctors who bled their patients, then bled them even more when the bleeding made them sicker, is exactly right: austerity reduces growth prospects, leading to calls for even more austerity.
08.47 Also in the news, Fitch has warned the US that it may be stripped of its AAA rating by 2013 because of rising debt levels.
Yesterday's ECB action managed to make 523 banks happy - to the tune of ?489bn in loans - but seemed to spook rather than reassure the markets.
08.39 Let's take you back to the FT and an interesting interview with Jeffrey Gundlach, chief executive of DoubleLine Capital. He is also the US's best-performing bond manager this year. He expects the eurozone crisis to reach a "crescendo" next year:
08.22 I can't believe it's 8.20 and we haven't had a graph yet. So, here's a great one from Bloomberg showing how global banks are now paying three times more Libor for dollar loans than British banks.
(You can see a bigger version of this graph by clicking the right-hand-side of the main picture at the top of this blog).
08.14 Justin Urquhart Stewart, director and co-founder of Seven Investment Management, has tweeted on China's housing bubble, which was also the subject of the Today Programme on Radio 4 this morning:
07.54 Quick update on corporate news: BA-owner IAG is to buy bmi from Lufthansa for ?172m in cash. IAG's Heathrow slot portfolio will increase by up to 56 additional daily slot pairs.
07.52 Top economist and Telegraph columnist Roger Bootle has given his unique review of 2011. Definitely worth a watch.
07.47 Just flicking through the Financial Times and there is an opinion piece on banks entitled "averting fallout of financial meltdown".
07.40 Italian prime minister Mario Monti is facing a confidence vote today that he called to speed up final approval of a ?33bn austerity package aimed at restoring confidence in the country's economy.
07.39 As it's the live blog's 100th birthday today, we want to know what your defining moment of the eurozone debt crisis has been
07.34 Elsewhere on the Telegraph site today, Britain's most senior civil servant Sir Gus O?Donnell has publicly questioned whether the United Kingdom will still exist in a few years? time.
Meanwhile, the Centre for Economics and Business Research expects one in six workers, some five million people, to take two weeks' holiday this Christmas because business is so slow there is no point in them coming in. Douglas McWilliams, the centre?s chief executive, said:
07.26 Damian Reece, head of business at the Telegraph, has commented on yesterday's ECB measures in today's paper: Eurozone zombies follow Mario Draghi's cheap money
07.00 Later today we will get revised third-quarter GDP figures for the UK and US. The expectation is for unrevised growth of 0.5pc in Britain and 2pc in the US. In an hour, the FTSE 100 is predicted to open up 0.3pc. Later, the Dow is expected to open down 0.1pc.
06.34 The Guardian is carrying a feature today claiming that a new generation of Greeks are leaving the country and heading to Australia, the US, Russia, China and Iran because of the debt crisis. Australia is particularly popular due to its substantial Hellenic population - Melbourne claims to be the largest Greek city in the world outside of Greece.
06.30 Back to the (very large) matter at hand. And Sir Philip Hampton, the chairman of Royal Bank of Scotland, expects a "small country" to leave the eurozone, putting more strain on the world's banking system.
"It could be any of them because I think that some of these things will be driven by political events as much as by economic circumstances and social unrest, and all of those sorts of things. But I think there is a very good chance that one country will fall out."
06.25 Big news! Today is the 100th day of our eurozone debt crisis live blog. So, from all at the Telegraph Business section, thanks for reading, and we hope you have a great Christmas.
06.22 Madrid-based Vega Asset Management, one of the most prominent hedge funds holding Greek bonds, has threatened legal action against officials negotiating the country?s debt restructuring if losses are too deep, raising a hurdle to eurozone leaders? hopes of quickly reducing Greece's debt levels.
Jes?s S?a Requejo, a senior Vega executive, wrote:
6.15 ?489,000,000,000. The amount that eurozone banks received in cheap loans from the ECB in a special refinancing operation. Yet it still wasn't big enough to calm the bond markets. Bazooka, anyone? Louise Armitstead reports:
The record half-trillion euro take-up ? which was far greater than the market had expected ? initially triggered a ?sugar rush? of euphoria as the move was hailed as a decisive ?game changer?.
But stock markets fell as economists and financiers recognised that while the imminent danger of another credit crunch had been averted, the threat of sovereign defaults had not.
Nick Matthews, at Royal Bank of Scotland, said: ?While the action is very important to help stabilise the situation and reduce the funding risk for the banks, it is unlikely to bring about a turning point in this crisis as the problems are much greater than those in the banking sector and has other political and economic dimensions.?
06.08 A quick look at this morning's papers:
Telegraph: ?489,000,000,000 - how much the ECB has lent troubled European banks
Financial Times (?): Banks snap up ?489bn in ECB loan offer
Guardian: ECB loans highlight funding pressure on eurozone banks
The Times (?): Banks clamour for ECB cash
06.05 Good morning and welcome back to live coverage of the global debt crisis.
Debt crisis live: archive
stevie williams steve williams koch brothers dash diet weather phoenix dippin dots triumph the insult comic dog
No comments:
Post a Comment