June 2010

WTO Rules Against Airbus for Illegal Subsidies, while China subsidizes Paper Industry

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The WTO has ruled against Airbus for illegal government subsidies.

The World Trade Organization ruled Wednesday that European governments gave planemaker Airbus illegal subsidies in its battle with U.S. competitor Boeing Co., in a first key ruling on a long-running dispute between the European Union and Washington.

Problem is the ruling is over 1000 pages and interpretation, as in will anything happen as a result, is confusing. So now the U.S. and the EU are arguing over what the ruling means.

Take, for example, one key argument in the dispute: did the U.S. prove that Airbus funding was harming Boeing? The U.S. says yes, as the panel recognized the ''serious prejudice'' suffered by the Chicago-based company.

But the EU is happy that American claims of ''material injury'' were rejected.

There were differing views on whether that means European subsidies were responsible for lost American jobs or market share.

Another question is what this means if the U.S. wishes to subsidize and protect key industries and innovation for future economic growth.

Notice this ruling comes years too late to stop Airbus from taking away orders and business from Boeing.

Meanwhile EPI has a new report, which shows China subsidized it's paper industry by $33 billion dollars from 2002-2009 to overtake the global market.

Consumer Confidence Nosedives in June 2010, down 9.8 points

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The Consumer Confidence Index cliff dove 9.8 points in June.

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From the Press release:

The Conference Board Consumer Confidence Index® which had been on the rise for three consecutive months, declined sharply in June. The Index now stands at 52.9 (1985=100), down from 62.7 in May. The Present Situation Index decreased to 25.5 from 29.8. The Expectations Index declined to 71.2 from 84.6 last month.

Those saying conditions are “good” decreased to 8.0 percent from 9.7 percent, while those saying business conditions are “bad” increased to 42.4 percent from 39.5 percent. Consumers’ assessment of the labor market was also less favorable. Those claiming jobs are “hard to get” increased to 44.8 percent from 43.9 percent, while those saying jobs are “plentiful” decreased to 4.3 percent from 4.6 percent.

Consumers’ short-term outlook, which had improved significantly last month, turned more pessimistic in June. Those anticipating an improvement in business conditions over the next six months decreased to 17.2 percent from 22.8 percent, while those expecting conditions will worsen rose to 14.9 percent from 11.9 percent.

Austerity and Class War

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The Republican's filibuster of the "tax extenders" bill will have severe economic consequences.
Moody's is predicting the loss of 200,000 jobs. Nomura Securities says it will knock 0.4% off of the GDP.
A good 2 million unemployed families will have their last financial lifeline cut by the second week of July. The suffering of these families is about to increase many fold.

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In midst of the outcry from the struggling working class, came this statement from Sen. Debbie Stabenow (D-Mich.):

"It is very clear that the Republicans in the Senate want this economy to fail. They see that things are beginning to turn around.... In cynical political terms, it doesn't serve them in terms of their election interests if things are beginning to turn around."

Now I like conspiracy theories more than most, maybe even too much, but I also recognize that describing a political opponent in 2-dimensional terms with evil intent is usually an indication of something missing from your theory.

What is missing here is the concept of class interests.

Spanish banks staring down the barrel of insolvency

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Last week a source reported that Spain was effectively cut off from the capital markets. This would put Spain in the same boat that Greece currently resides.
But was the report true? Today's news virtually confirms it.

Spanish banks have been lobbying the European Central Bank to act to ease the systemic fallout from the expiry of a €442bn ($542bn) funding programme this week, accusing the central bank of “absurd” behaviour in not renewing the scheme.
On Thursday, the clock runs out on the ECB financing programme – the largest amount ever lent in a single liquidity operation by the central bank – under the terms of the one-year special liquidity facility launched last summer.
One senior bank executive said: “Any central bank has to have the obligation to supply liquidity. But this is not the policy of the ECB. We are fighting them every day on this. It’s absurd.”
Banks across the eurozone, but in Spain in particular, have found it hard in recent weeks to secure liquid funding in the commercial markets, with inter-bank funding virtually non-existent.
“The system is just not working,” agrees Simon Samuels, banks analyst at Barclays Capital in London. “We’re approaching the third year of liquidity support and still the market cannot survive unaided.”

This story contains two nuggets of information:

COP Report on AIG and Congressional Hearing with Geithner

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The Congressional Oversight Committee released a report on AIG last week. But before we get into those damning facts, check out the below video clip of Elizabeth Warren trying to confront Timothy Geithner on the failure of HAMP. Notice how 1 million people losing their homes goes in one ear and out the other as Treasury Secretary Geithner rambles on in response.

 

 

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