The Cynical Economist

From LLOYDS

The knock-on effects of the financial crisis and the deepest global recession in decades continue to be felt across the world, causing political risks to increase in 2010.

That’s the message from Aon at the launch of this year’s edition of its Political Risk Map, which offers a snapshot of the political risk climate across the globe.

Downgraded

There were twice as many countries downgraded in terms of political stability than were upgraded, with 18 countries deemed to show higher levels of political risk than they did in 2009. “The global financial crisis of late 2008 and early 2009 continues to manifest itself in increased levels of political instability. The initial impact has shifted from being an economic problem to being a political problem,” said Miles Johnstone, a Director of Aon’s political risk team.

The impact of the economic downturn on the global political climate was also highlighted in last year’s Lloyd’s 360° Risk Insight report “Global Recession: The Magnifying Glass for Political Instability”.

2010 is likely to witness an increasing risk of non-payment of sovereign debt, exchange transfer restrictions and rising political interference as a result of the growing fallout from the economic crisis, said Aon.

Latvia was one of those countries downgraded as it struggles to come to terms with a deep recession triggered by the global financial meltdown. Last year there were riots in its capital Riga in protest at the worsening economic crisis, which is set to cause the country’s GDP to shrink 18% this year. Its coalition government is under increasing strain as it pushes through biting austerity measures to slash its budget deficit while it tries to negotiate a 7.5 billion euro rescue package led by the International Monetary Fund.

Ukraine and Ghana have been downgraded as a result of rising political and credit risk claims to the international insurance market.

Defaulted debt

In Ghana, state-owned oil refineries defaulted on around $600 million of debt repayments in 2008, much of it relating to payment obligations to international banks, oil traders and multinational oil firms. There were further defaults in 2009 and these repayment problems have led to claims notifications to insurers, which are likely to result in payments running into tens of millions of dollars.

Yemen has also been downgraded, partly as a result of a stream of claims from damage to foreign-owned assets in the north of the country due to political violence. “We expect there to be more as the country risks deteriorate further this year,” said Johnstone.

Food and water insecurity will also present a growing risk to the political stability of a number of countries, Aon said. In 2008, riots flared in cities across the world as rice and corn supplies ran low and similar unrest may return in 2010.

Aon named 30 countries it considers to be most vulnerable to food and water insecurity risks. They are mostly African countries, led by Mauritania, whose ability to grow their own food will be threatened by the effect of climate change and whose developing economies will mean they cannot afford to buy the additional food they need to feed themselves.

Upgraded

Nine countries were upgraded in this year’s edition of the map. Albania’s rating improved as a result of its concerted effort to fight crime and corruption as it attempts to meet the criteria for membership of the European Union. Sri Lanka and Colombia were upgraded on account of their improved internal security situations.

Vietnam’s strong economic performance over the past year, one of the best in Asia, was also rewarded with an upgrade.

From Bloomberg
By Michael McKee

Small businesses are becoming the Achilles heel of the U.S. recovery by limiting growth and job creation.

Companies with fewer than 500 employees, such as Phoenix Technologies Ltd. and Sonic Corp., helped lead the economy out of the four recessions since 1980. This time, they continue to cut capital spending and dismiss workers, eliminating 3,000 jobs in January, according to Roseland, New Jersey-based Automatic Data Processing Inc., the world’s largest payroll processor.

Improvement in the unemployment rate, which fell to 9.7 in January from 10 percent in December, may stall later this year if these firms aren’t hiring, and growth likely won’t meet the median 2.7 percent annual rate forecast for 2010 by 67 economists in a Jan. 14 Bloomberg News survey.

“Will you have a sustainable recovery a few years down the road without getting some small-business spending? No,” Cary Leahey, senior managing director at Decision Economics Inc. in New York and a former White House economist, said in an interview. “Wall Street gets it.”

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I posted parts of this program before, now here it is the whole program…

From Here

Michael Moore’s Anti-Greed Film To Be Subsidized by Michigan Taxpayers

Too bad the news media doesn’t  show it to the guys on Wall Street and in Washington DC.

and 90% Vacant Strip Malls in Pinellas Park

and St. Petersburg

From Lew Rockwell site
by Don Cooper

The year was 1925 and an “agent” of “the organization” sent Mr. Brown, a small business owner, a letter stating that he would be expected to pay a small fee up front and then 25% a month of his small business’ revenue to “the organization” if he would like to do business in town. The money, Mr. Brown was reassured, would go to the “community improvement fund” which would be used to ensure that small businesses like Mr. Brown’s were protected from any sort of economically harmful competitors or other physical or economic harm. Competitors who did not pay the fees and other monthly charges simply would not be allowed to do business thus providing Mr. Brown and others like him with a favorable business environment. The letter also stated that if Mr. Brown refused these terms of doing business then he too would be refused the privilege of doing business in town.

Mr. Brown, however, was an intelligent and reasonable man and he refused to give into this kind of extortion. He neither wanted nor needed economic protection from this “organization.” He simply wanted to do with his own private property what he wished while providing a service to the community that the community wanted.

Within a short period of time two gun-toting “agents” from the “the organization” showed up at Mr. Brown’s business, locked him in handcuffs and took him to jail. That’s right jail, because the “agents” were from “the organization” known as the IRS.

See taxes and other business fees in America are not voluntary. Whether a business owner feels he can benefit from paying these taxes or not and therefore decide for himself whether he wants to participate in the governments social programs is irrelevant. They are mandatory and anyone’s refusal to pay them is considered criminal.

Extortion is defined as occurring when a person unlawfully obtains money, property or services from a person, entity, or institution, through coercion. And coercion is defined as the practice of forcing another party to behave in an involuntary manner (whether through action or inaction) by use of threats, intimidation, trickery, or some other form of pressure or force.

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From Money Talk
By: Gene Koprowski

The Obama administration lacks the “political capital” for serious financial reform, and that is putting the U.S. in a perilous fiscal position, writes former Clinton White House economist Nouriel Roubini.

In his column in Forbes magazine, Roubini, a professor of economics at the Stern School of Business at New York University and chairman of Roubini Global Economics, a consulting firm, notes that the president’s “waning political capital” will stand in the way of achieving the left’s fiscal, social and economic goals.

The administration has proposed a new budget, as well as a tax on banks, and is actively marketing the ideas, but these proposals fall short of the required “aggressive fiscal reforms” to make America competitive again, writes Roubini.

“The fiscal deficit is likely to remain near $1 trillion and exceed 5 percent of GDP over the next decade and trend higher thereafter,” writes Roubini.

“Near-term spending on fiscal stimulus and defense will remain high at least until 2011, as Obama’s proposed three-year freeze on discretionary spending excludes defense and entitlements.”

What is more, the sluggish and jobless economic recovery and “weaknesses in the financial and household sectors” will keep federal revenues down, adds Roubini.

Given this “ticking fiscal bomb,” as well as midterm and presidential elections in November 2010 and 2012, the necessary reforms will not be undertaken, adds the economist.

“With a subpar economic recovery and an unemployment rate above 8 percent during 2011-12, the Democrats, struggling to maintain power, are unlikely to approve spending cuts, while the Republicans, seeking to revive their prominence, will be unyielding on tax hikes,” writes Roubini.

“Even if Obama manages to establish a fiscal commission by executive order, Congress will be wont to reject any radical fiscal reform proposals.”

Others agree with that analysis.

The BBC is reporting that the U.S. had a “record” deficit last year, and it will continue to rise until 2020.

Geithner Says U.S. Will ‘Never’ Lose Aaa Debt Rating – LOL.“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast yesterday whether a downgrade is a concern. “That will never happen to this country.”

US jobless numbers hide scale of problem – Whether they’re “unemployed,” “marginally attached” or “discouraged,” they’re all still suffering in what President Obama’s economic advisor Larry Summers recently called the “human recession”.

Greece’s financial crisis puts the future of the euro in question – As the country plunges into the red again, the IMF is itching to march into the eurozone and intervene. Without closer fiscal union, how long can Brussels hold the currency together?

Group of 7 Vows to Keep Cash Flowing - Finance ministers from seven of the world’s biggest economies concluded a meeting in the Canadian Arctic on Saturday with pledges to maintain their fiscal stimulus programs, despite rising worries among investors about the mounting debts of some European governments.

Taxpayers should demand to be billed monthly for our share of the national debt – “Our elected officials tell us that between entitlement programs, defense needs, jobs programs and the like, they are helpless to cut their spending addiction,” Rotbart writes. “But if good, hard-working Americans got a monthly reminder from Uncle Sam of just how much each of us has ‘borrowed’ from our good friends in China, the Middle East and elsewhere, somehow I believe we the people would find a way to get our elected representatives to snap shut their checkbooks once and for all.”

Frustrated Job Seekers Deciding to Call It Quits – Many jobless people have reached a conclusion that captures the depth of the unemployment crisis: Looking for a job is a waste of time.

Global bear rally will deflate as Japan leads world in sovereign bond crisis - Milton Keynes will be vindicated. Lord Keynes will lose some of his new-found gloss. The Krugman doctrine that we should all spend our way back to health by pushing deficits to the brink of a debt spiral – or beyond the brink – will be seen as dangerous.

Burger King sales fall again – The Whopper is having a shocker. The world’s second-largest hamburger chain, Burger King, is struggling to arrest a seemingly unstoppable erosion in sales and is under fire over an unimaginative menu, conflicts with franchisees and a “narrow philosophy” of sticking to flame-grilled meat sandwiches and fries.

Target to Demote 8,000? Ouch! – In an apparent effort to reduce the expense of health care and other employee benefits, a Target employee reports that he has just been informed that Target will down-grade as many as 8,000 employees from full-time to part-time.

This Crisis Won’t Stop Moving – YOU know we’re in trouble when we’re told that the economic problems in Greece, Portugal and Spain, the most indebted countries in the euro zone, are likely to remain safely contained in those nations.

Governor plans emergency address on Nevada budget – Nevada’s budget is so far out of balance that by one account the state could lay off every worker paid from the general fund and still be $300 million in the red.

Fire Departments Charge for Service, Asking Accident Victims to Pay Up – Victims, Insurance Companies Complain Fire Departments Are Double-Dipping for Services Paid by Taxes

Endgame – Illinois is far from the only state that backed itself into a corner by assuming that rising tax revenues from a bubble economy could be extrapolated indefinitely into the future. 41 US states currently face budget deficits.

Spending America Into Oblivion – President Obama’s own budget confesses that it would more than triple the national debt from $5.8 trillion at the end of 2008 to $18.6 trillion by 2020.

TrimTabs CEO Biderman: I Think The Government Is Buying Up The Stock Market, Though I Have No Evidence

Mortgage Bankers Association Sells Headquarters at Big Loss – LOL…Some should wonder if they see it coming. Like millions of American households, the Mortgage Bankers Association found itself stuck with real estate whose market value has plunged far below the amount it owed its lenders.

US food stamps set ever-higher record-32.8 million – up 246,000 from the previous month and the latest in record-high monthly tallies that began in December 2008.

Government Intervention Will Leave a Lasting Hangover – President Obama’s economic policy has run smack into reality. No one believes that he can keep spending even to the massive levels he projects, or eventually lower the deficit, or persuade congress to switch from profligacy to prudence, or … well, you get the idea.

How Your Tax Dollars Are Spent – slideshow

One of my favorite composers…If you have seen a good movie deserving an Oscar –  you have probably heard a music, that was composed for that movie by Ennio Morricone ….

A lot of his music was removed from youtube due to copyright issues,  but you still can find few clips out there…