Standard & Poors is sticking it to the Europeans and giving them a more American AA rating: “In our opinion, the overall creditworthiness of the now 28 European Union member states has declined.” Standard & Poors is apparently concerned about the Eurozone’s budgetary negotiations and financing, however many European officials are pointing out “that the EU has no debt or deficit to speak of and its budget is a standalone entity financed by 28 countries, making it one of the most stable institutions and most reliable borrowers in the world.” Which makes you wonder…the EU currently has a budget for the next 7 years, approved and backed by all 28 members, 4 of which are in the Top 10 largest economies in the world. That is, of course, if you don’t include the, um, European Union. The United States is celebrating the first time in about 30 years that is has been able to get 2 member states (parties) to agree on a budget, and we are, I guess, the same rating. This all seems…misguided? Markets don’t seem to care, anyway, so.
The First Step Is Admitting You Are Powerless: Bank of Japan Edition
The Bank of Japan kept its monetary policy unchanged this morning and “expects Japan’s economy to continue a moderate recovery trend,” furthermore they don’t expect their sales tax increase to kill the economy (great!) and they are pretty excited about the United States economic momentum. Meanwhile, Japan shows there’s no need to fear The Taper because let’s face it, relapse is entirely possible. Recall Japan’s history with monetary policy and zero lower bound: back in 2005, BOJ Governor Toshihiko Fukui unleashed The Taper on Japan and a year later he raised rates above zero. The economy did not respond well. The first thing the next Governor did was resurrect QE and so forth. Apparently this is all a “lesson from Tokyo that it’s a lot easier to slash rates to zero and beyond than return them to normal.” Moreover, Japan is a perfect example of how “entire economies tend to get addicted to free money.” Hmm. This is not very reassuring? It’s kind of like telling an addict it’s easier to just keep shooting heroin instead of get sober: “so go ahead and brace for a brutal few years of Fed normalization and financial sobriety. More likely, Yellen & Co. will be forced to leave the bar open indefinitely.”
Happy Friday: FARK.com’s Favorite Business Headlines of the Year
Borderline inappropriate. 100% hilarious.
Commerce Department: Q3 GDP revised higher to 4.1%. Business spending revised from 3.5% to 4.8%; consumer spending revised up 0.6%
USA: Trees Grow on Money
Here’s an interesting derivative indication of consumer spending during the holidays: “Over the three weeks since Thanksgiving, tree sellers reported sales were up an average of 9% above year earlier levels. That was well above the 5% average for those three weeks in the survey’s 11 year history.”
Conference Board: leading index increased 0.8% last month, fifth straight month of gains.
The Organization for Economic Cooperation and Development (OECD) have a good graph on how the purchasing power, or real income, per capita has changed between 2008 and 2011 for different countries. Interesting observations: the US dropped 2.2%, Germany increased 5.5% and the UK fell 10%.