UK CITIZENS QUIT EU VIA HISTORIC REFERENDUM VOTE 51%-48.1% (BREXIT)

#Brexit

UK CITIZENS QUIT EUROPEAN UNION VIA HISTORIC REFERENDUM VOTE:

COMMONERS vs ELITE - ONLY LONDON REMAINS.

"GOD SAVE THE QUEEN" UK ANTHEM MAY CHANGE.

GLOBAL MARKETS PLUNGE AFTER BREXIT VOTE.

DAVID CAMERON TO DELIVER SPEECH AFTER THE MARKETS OPEN.

 Sources:  BBC News, Bloomberg News, Young Turks,
The Guardian, Telegraph,  YouTube 

LEAVE EU:

Vote share

51.9%

VOTES17,410,742VOTES

REMAIN IN EU:

Vote share

48.1%

VOTES

16,141,241

VOTE

***** BREXIT: UK votes to leave EU in historic referendum

The UK has voted to leave the European Union after 43 years in a historic referendum.

Leave won by 52% to 48% with England and Wales voting strongly for Brexit, while London, Scotland and Northern Ireland backed staying in the EU.

UKIP leader Nigel Farage hailed it as the UK's "independence day" but the Remain camp called it a "catastrophe". 

The pound fell to its lowest level against the dollar since 1985 as the markets reacted to the results.

The referendum turnout was 71.8% - with more than 30 million people voting - the highest turnout at a UK election since 1992.

Wales and the majority of England outside London voted in large numbers for Brexit.

Labour's Shadow chancellor John McDonnell said the Bank of England may have to intervene to shore up the pound, which lost 3% within moments of the first result showing a strong result for Leave in Sunderland and fell as much as 6.5% against the euro.

'Independence day'

UKIP leader Nigel Farage - who has campaigned for the past 20 years for Britain to leave the EU - told cheering supporters "this will be a victory for ordinary people, for decent people".

Mr Farage - who predicted a Remain win at the start of the night after polls suggested that would happen - said Thursday 23 June would "go down in history as our independence day".

He called on Prime Minister David Cameron, who called the referendum but campaigned passionately for a Remain vote, to quit "immediately".

A Labour source said: "If we vote to leave, Cameron should seriously consider his position."

But pro-Leave Conservatives including Boris Johnson and Michael Gove have signed a letter to Mr Cameron urging him to stay on whatever the result.

Labour former Europe Minister Keith Vaz told the BBC the British people had voted with their "emotions" and rejected the advice of experts who had warned about the economic impact of leaving the EU.

He said the EU should call an emergency summit to deal with the aftermath of the vote, which he described as "catastrophic for our country, for the rest of Europe and for the rest of the world".

Germany's foreign minister Frank Walter Steinmeier described the referendum result as as "a sad day for Europe and Great Britain".

But Leave supporting Tory MP Liam Fox said voters had shown great "courage" by deciding to "change the course of history" for the UK and, he hoped, the rest of Europe.

And he called for a "period of calm, a period of reflection, to let it all sink in and to work through what the actual technicalities are," insisting that Mr Cameron must stay on as PM.

Exit process

Scotland's First Minister Nicola Sturgeon has said that the EU vote "makes clear that the people of Scotland see their future as part of the European Union" after all 32 local authority areas returned majorities for Remain.

London has voted to stay in the EU by around 60% to 40%. 

However, no other region of England has voted in favour of remaining. 

The referendum has underlined the social and cultural gap between London and provincial England. 

Remain's defeat seems to have been primarily the product of the decisions made by voters living north of the M4. 

Throughout the Midlands and the North of England the level of support for Remain was well below what was required for it to win at least 50% of the vote across the UK as a whole. 

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Britain would be the first country to leave the EU since its formation - but a leave vote will not immediately mean Britain ceases to be a member of the 28-nation bloc.

That process could take a minimum of two years, with Leave campaigners suggesting during the referendum campaign that it should not be completed until 2020 - the date of the next scheduled general election.

The prime minister will have to decide when to trigger Article 50 of the Lisbon Treaty, which would give the UK two years to negotiate its withdrawal.

Once Article 50 has been triggered a country can not rejoin without the consent of all member states.

Mr Cameron has previously said he would trigger Article 50 as soon as possible after a leave vote but Boris Johnson and Michael Gove who led the campaign to get Britain out of the EU have said he should not rush into it.

But they also said they want to make immediate changes before the UK actually leaves the EU, such as curbing the power of EU judges and limiting the free movement of workers, potentially in breach the UK's treaty obligations. 

The government will also have to negotiate its future trading relationship with the EU and fix trade deals with non-EU countries. 

In Whitehall and Westminster, there will now begin the massive task of unstitching the UK from more than 40 years of EU law, deciding which directives and regulations to keep, amend or ditch.

The Leave campaign argued during a bitter four-month referendum campaign that the only way Britain could "take back control" of its own affairs would be to leave the EU.

Leave dismissed warnings from economists and international bodies about the economic impact of Brexit as "scaremongering" by a self-serving elite.

Mitt Romney Raises More Money Than Obama In May: $76.8 Million To Obama's $60 Million! (NO Jobs!)

Visit msnbc.com for breaking news, world news, and news about the economy

Immediately after the Recession, from January 2009 to January 2011 if Democrats had focused on stopping widespread Employment Discrimination & passed a WPA type JOBS Program instead of wasting Money on Egg Head Think Tanks & Political Favors, many BLACK & Latino Obama Supporters would have more Money to Donate for Pres. Obama's re-election in 2012.

Instead as it stands Millions of BLACK & Latinos are now Jobless and BROKE!
Thus Mitt Romney's Supporters (Regular Donors) are able to Donate More to his Grassroots Campaign Coffers than Pres. Obama's Supporters. (Regular Donors)

Thanks for Nothing Congressional Democrats!






Mitt Romney raises more money in one month than Obama for first time in race for White House


Mitt Romney pulled in more money than President Obama in May, further shaking a White House race that is shaping up to be a nail-biter.

Romney and the Republicans hauled in $76.8 million last month, far more than the $60 million raised by Obama and the Democrats.

This is the first time that Romney has outraised the incumbent and it comes as national polls show the race tightening dramatically as the economy continues to sputter.

Both men’s May total significantly outpaced what they raised in April.

For Romney, it was the first month when - as the clear GOP nominee - he was able to jointly raise money with the Republican National Committee.

"Our strong fundraising is a sign that Americans are tired of President Obama’s broken promises and want a change of direction in the White House," RNC Chairman Reince Priebus said.

Obama’s haul - a significant jump from the $43.6 million he and the Democrats raised last month - was in large part attributed in part to his support of same-sex marriage.

Obama announced the total over Twitter.

“The campaign raised more than $60 million across committees in May,” the President said. “Thanks to everyone who chipped in.”

Obama’s total including donations came from 572,000 people and 147,000 first-time donors - many of whom opened their wallets after the President became the first occupant of the White House to endorse same-sex marriage.

The total was also boosted by a record $15 million raised at a fundraiser at George Clooney’s Los Angeles home.

The average donation to the President’s re-election bid during May was $54.94, continuing the Obama campaign’s success of wooing small donors.

By the end of April, 43% of Obama’s donors gave $200 or less, according to a study by the Campaign Finance Institute, a Washington research group.

Meanwhile, only 10% of those who gave to Romney during that period made donations of less than $200, pointing to the Republican’s reliance on fat-cat donors.

However, Romney had more success with the small donors in May, as his campaign boasted that 93% of gifts received that month were less than $250.

Obama now has raised approximately $277 million so far this year while Romney has totaled about $175 million. However, Romney is also expected to wield a significant advantage in money raised by the parties’ respective Super PACs.

Both men have aggressively hit the fundraising circuit in recent weeks, stockpiling cash in advance of what will likely be the most expensive election in history.

Obama and Romney have each criss-crossed the country, venturing into friendly and enemy territory alike to raise money.

Romney just completed a two-day trek through Texas that was expected to rake in $15 million.

Meanwhile, Obama hit four fundraisers in California - including one with a gay group - Wednesday and has one more scheduled for Thursday morning before he departs for Las Vegas to give a speech on jobs.

The fundraising totals continues a difficult stretch for Obama, who has been left reeling by a series of disappointing economic news.


Sources: MSNBC, NY Daily News, Youtube

Bernanke Warns Banks Of Another Pending Recession: More Middle Class Decline

Fed Chairman Ben Bernanke recently warned Bank Chiefs to hold onto to their Profits. Translation: U.S. is headed for another Recession.





Fed proposal would boost bank safety cushions

The Federal Reserve on Thursday proposed tough new rules to require banks to hold even more in reserves as a capital buffer to better withstand future financial crises.

Wall Street has been watching the rulemaking on capital buffers closely. Requirements about capital cushions can directly impact banks' ability to lend, make financial bets and profit off those loans or bets.

Tougher capital cushions are also a key step toward making banks safer and avoiding future taxpayer bailouts.

"Pre-crisis capital requirements were too low in general," said Federal Board Reserve Board governor Daniel Tarullo at a meeting Thursday.

The rules would require banks to keep 7% of risk-weighted assets -- the loans banks make judged by the degree of risk involved -- aside. Banks would have until 2019 to meet the new rules.

For 20 banks with more than $250 billion in total assets, the rules would be a little tougher -- 3% of all assets, including "off-balance sheet exposures" such as derivatives, would have to be kept off limits as a leverage ratio.

The provision would affect all the major megabanks, including JP Morgan Chase (JPM, Fortune 500), Bank of America (BAC, Fortune 500) and Citibank (C, Fortune 500), among others.

Derivatives are the risky bets that helped lead to the financial crisis of 2008.

The new rules are drawn from a 2010 deal negotiated with foreign nations, part of the so-called Basel III accords, requiring all banks to put more capital aside for emergencies.

Capital cushions have come under scrutiny again, in light of revelations that JPMorgan Chase lost $2 billion in bad bets made earlier this year and disclosed last month.

"This should improve the overall resiliency of the banking system," according to a memo on the new capital cushion rules released by the Fed.

Additionally, the Fed released new details on what qualifies as capital -- guidelines that are tougher than current standards -- the central bank notes.

Federal Reserve staff said that roughly 80% of banks already meet the tougher buffer of 7% of risk-weighted assets. They calculated that $3.6 billion would need to be raised to meet the new criteria.

The proposed rule will be voted on by the Federal Reserve Board and then faces 90 days of public comment.

Then the Fed and other federal regulatory agencies would officially approve it later this year. The rules would be phased in starting in January 2013.

During a Senate Banking Committee hearing Wednesday, bank regulators said that all U.S. banks were safer than they were three years ago.

JPMorgan Chase has a capital cushion of $101 billion, compared to $1.8 trillion in assets, said its regulator, Comptroller of the Currency Thomas Curry. That's about 5.6% of all assets.
But JPMorgan will likely have to set even more capital aside under the new rules.

That's because the proposed rules do not address an additional and controversial capital cushion that the largest U.S. banks may also have to meet.

That rule could raise the required buffer at some banks from the new standard of 7% to as high as 9.5% of risk-weighted assets.

The Federal Reserve is expected to tackle that issue later.


Sources: CNBC, CNN

Franklin D. Roosevelt & Obama On JOBS, Taxes & Social Security: "The New Deal" (Videos)

New Deal

The New Deal was a series of economic programs implemented in the United States between 1933 and 1936. They were passed by the U.S. Congress during the first term of President Franklin D. Roosevelt. The programs were responses to the Great Depression, and focused on what historians call the "3 Rs": Relief, Recovery, and Reform. That is, Relief for the unemployed and poor; Recovery of the economy to normal levels; and Reform of the financial system to prevent a repeat depression. The New Deal produced a political realignment, making the Democratic Party the majority (as well as the party which held the White House for seven out of nine Presidential terms from 1933 to 1969), with its base in liberal ideas, big city machines, and newly empowered labor unions, ethnic minorities, and the white South. The Republicans were split, either opposing the entire New Deal as an enemy of business and growth, or accepting some of it and promising to make it more efficient. The realignment crystallized into the New Deal Coalition that dominated most American elections into the 1960s, while the opposition Conservative Coalition largely controlled Congress from 1938 to 1964.

Historians distinguish a "First New Deal" (1933) and a "Second New Deal" (1934–36). Some programs were declared unconstitutional, and others were repealed during World War II. The "First New Deal" (1933) dealt with diverse groups, from banking and railroads to industry and farming, all of which demanded help for economic recovery. A "Second New Deal" in 1934–36 included the Wagner Act to promote labor unions, the Works Progress Administration (WPA) relief program, the Social Security Act, and new programs to aid tenant farmers and migrant workers. The final major items of New Deal legislation were the creation of the United States Housing Authority and Farm Security Administration, both in 1937, then the Fair Labor Standards Act of 1938, which set maximum hours and minimum wages for most categories of workers[1] and the Agricultural Adjustment Act of 1938.

Despite Roosevelt campaigning heavily against anti-New Deal Republicans and anti-New Deal Democrats, Republicans gained many seats in Congress in the 1938 midterm elections and the Democrats opponents of the New Deal retained their seats, resulting in the WPA, CCC and other relief programs being shut down during World War II by the Conservative Coalition (i.e., the opponents of the New Deal in Congress); they argued the return of full employment made them superfluous. As a Republican President in the 1950s, Dwight D. Eisenhower left the New Deal largely intact.

In the 1960s, Lyndon B. Johnson's Great Society took New Deal policies further. After 1974, laissez faire views grew in support, calling for deregulation of the economy and ending New Deal regulation of transportation, banking and communications in the late 1970s and early 1980s.[3] Several New Deal programs remain active, with some still operating under the original names, including the Federal Deposit Insurance Corporation (FDIC), the Federal Crop Insurance Corporation (FCIC), the Federal Housing Administration (FHA), and the Tennessee Valley Authority (TVA). The largest programs still in existence today are the Social Security System and the Securities and Exchange Commission (SEC).

Sources: White House, Wikipedia, Youtube, Google Maps

Financial Crisis History Documentaries: Deep Cuts Cause Recessions (Videos)

"I am a most unhappy man.

I have unwittingly ruined my country. A great industrial nation is controlled by its system of credit. Our system of credit is concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men.

We have come to be one of the worst ruled, one of the most completely controlled and dominated Governments in the civilized world no longer a Government by free opinion, no longer a Government by conviction and the vote of the majority, but a Government by the opinion and duress of a small group of dominant men."

-Woodrow Wilson


Sources: Famous Quotations On Banking, PBS, Rescue America, Youtube

Dow Plummets Amid Global Fears From GOP Engineered Debt Crisis! (Tea Party Backlash)

Stocks Down Over 4% in Global Sell-Off

Stocks around the world fell sharply Thursday on intensifying investor fears about a slowdown in global economic growth and worries about Europe’s ongoing debt crisis, which is centered now on Italy and Spain.

Stock market indexes in the United States and Europe dropped more than 4 percent as Japan intervened to weaken its currency and the European Central Bank began buying bonds to try to calm markets.

At the close, the Standard & Poor’s 500-stock index was down 60.27 points, or 4.78 percent, to 1,200.07. The Dow Jones industrial average was off 512.76 points, or 4.31 percent, to 11,383.68, and the Nasdaq was down 136.68, or 5.08 percent, to 2,556.39.

It was the biggest percentage drop since February 2009.

Following accelerating falls over the past two weeks, the stock market is now officially in “correction” territory, defined as a drop of 10 percent to 20 percent since the latest peak.

The S.&P. 500 has fallen 10.6 percent since its recent high of 1,363.61 on April 29, underlining the new negative investment sentiment about the economy and Europe.

“We are now in correction mode,” said Sam Stovall, chief investment strategist at Standard & Poor’s. “We could have another couple of weeks to go before it bottoms.”

The last time the market was in a correction was last summer, when it fell 16 percent before recovering.

A fear haunting markets is that the United States economy may be heading for a double-dip recession. And even after a second major rescue package for Greece and the agreement to raise the debt ceiling in the United States, investors are concerned that world leaders have not done enough to address fragile underlying economic growth, while Europe’s debt problems have moved on to the much bigger economies of Italy and Spain.

Mohamed El-Erian, chief executive of the bond giant Pimco, said investors were selling risky assets like stocks “globally prompted by concerns about the weakening economic outlook, spreading contagion in Europe and insufficient policy responses.”

With Thursday’s dive, the three major American indexes had erased all of the gains made so far in 2011, with the S.&P. and Nasdaq markedly below the start of the year.

In afternoon trading, the Dow, an index of 30 blue-chip stocks, was about 9.4 percent off of its most recent closing high of 12,810.54, reached on April 29. But it was 18 percent below its all-time high of 14,164.53, on Oct. 9, 2007.

Since the beginning of 2008, there have been 17 days with drops of 4 percent or more – 13 in 2008 and 4 in 2009.

Unnerved by policymakers’ apparent inability to get ahead of Europe’s festering debt crisis, European stock markets turned sharply negative across the board.

In Britain, stocks closed down 3.43 percent. In Germany, the DAX index dropped 3.4 percent. In France, the CAC 40 closed down 3.9 percent.

“This is the worst it has been in Europe,” said Jens Nordvig, currency economist at Nomura Securities in New York. “The current rescue package was not enough to cope with the size of the problems posed by Italy and Spain. We need a new framework that can cope with those two countries, and without it markets are on their own and are falling.”

Major indexes in Italy, Spain, France and Switzerland all closed Thursday more than 20 percent below their 2011 highs, while Germany was off nearly 15 percent and Britain’s decline was more than 11 percent.

The selling has extended to many other markets. Mexican stocks are off almost 14 percent from their highs earlier this year, and Brazil’s major index has lost more than a quarter of its value.

Yields on Italian government bonds, already above 6 percent, rose sharply, adding to concerns that the nation’s current debt position is unsustainable. Yields on Spanish debt also increased. This was despite large-scale intervention by the European Central Bank, which for the first time since March began buying bonds in an apparent attempt to prevent the region’s sovereign debt crisis from engulfing Italy.

The markets had expected some concrete action from Prime Minister Silvio Berlusconi on Italian’s worsening debt situation in public remarks late Wednesday. But they were disappointed when he defended the country’s fundamentals and said current packages were enough to foster economic growth. The Italian stock market opened up but then slipped sharply.

Since many of Europe’s banks hold the bonds of countries like Italy and Spain, concern is turning to the health of the banking system as these bonds drop in value. With warning signs flashing that some European banks are struggling to fund themselves in increasingly expensive credit markets, the E.C.B. also moved to help weaker banks by expanding its lending to institutions in the euro area at the benchmark interest rate. Bank stocks nevertheless fell sharply in Europe.

Jean-Claude Trichet, the president of the E.C.B., said the bank had acted in response to “renewed tensions in some financial markets in the euro area.”

He said that uncertainty created by the debate in the United States to raise the debt ceiling had unnerved European markets as United States investors had become increasingly reluctant to lend to European banks. “It’s clear the entire world is intertwined,” he said. “What happens in the U.S. influences the rest of the world.”

But the E.C.B.’s steps were not enough to help Europe’s bond markets.

Laurent Bilke, an analyst at Nomura in London, said the E.C.B. had been buying government debt of Portugal and Ireland in order to calm these markets. But it had not been buying Italian and Spanish government debt, and that had unnerved investors.

He said the E.C.B. council had also not been united in its decision to take extraordinary measures to intervene in the markets, and that fact had spooked markets.


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Sources: AP, CNN, NY Times, White House, Youtube, Google Maps

Mainstream Media Switched Jobs Crisis To Debt Debate For GOP (2012 Conspiracy)

The Invisible Unemployed: Major Media Ignore Jobless Americans And Obsess Over U.S. Debt

As Think Progress’s Lee Fang has reported, a handful of right-wing front groups and billionaires have engineered a political consensus that trumpets reducing U.S. debt rather than tackling unemployment.

But unfortunately, these front groups have had some assistance from the mainstream media outlets who seem obsessed with covering deficit reduction and debt debates in Washington, while ignoring the other problems plaguing the economy as it recovers from the Great Recession.

For instance, a Think Progress media analysis of the coverage of three major cable news networks — CNN, MSNBC, and Fox — over the last week finds that these outlets gave a much larger portion of their coverage to U.S. debt rather than the unemployed. Think Progress scanned media coverage at these outlets for the words “unemployed,” “unemployment,” and “debt.” The first two phrases put together still got 15 times less coverage than the debt.

Of course, it makes sense that the media dedicated time to the debt ceiling debate last week, as the U.S. was inching closer and closer to an unprecedented default on its obligations. However, by failing to cover the other problems in the economy — continued high unemployment, mounting foreclosures, and record corporate profits that are not translating into job creation — the media does a disservice to those who are struggling with a slew of economic problems that have nothing to do with the federal budget or congressional negotiations.

And while the mainstream press has obsessed over U.S. debt, the American people appear to have different priorities. A Gallup poll taken last month finds that only 16 percent of Americans see the federal budget deficit as the “most important problem facing the country.” Meanwhile, 27 percent of American see “unemployment/jobs” as that problem, while 31 percent name the “economy in general” as that concern.

Sources: Fox News, MSNBC, Think Progress, Youtube

America Rapidly Spiraling Into GOP Engineered Double-Dip Recession

Visit msnbc.com for breaking news, world news, and news about the economy

10 signs the double-dip recession has begun

Friday's news on GDP shows the double dip has arrived — an expansion of only 1.3 percent and consumer spending up 0.1 percent in the second quarter. Astonishingly low by any account. The debt ceiling trouble and lack of a longer term resolution to the deficit will make it worse.

The U.S. has entered a second recession. It may not be as bad as the first. Economists say that the Great Recession began in December 2007 and lasted until July 2009. That may be the way that the economy was seen through the eyes of experts, but many Americans do not believe that the 2008-2009 downturn ever ended. A Gallup poll released in April found that 29 percent of those queried thought the economy was in a “depression” and 26 percent said that the original recession had persisted into 2011.

It is any wonder that many Americans believe that the economic downturn is still in progress? Home prices have fallen to 2002 levels. Values have dropped nearly 50 percent in parts of Florida, California, Nevada and Arizona. Property values are also down that much in parts of troubled big cities like Detroit. Estimates are that as many as 11 million homes have underwater mortgages. Banks have inventories of as many as 2 million foreclosed homes which have not even been released to the market. Home prices could fall another 10 percent if current trends persist.

Perhaps the most powerful argument that the recession never ended or that a new one has begun is the persistence of unemployment. Fourteen million people are out of work. A third of those have been jobless for more than a year. May employment data showed the jobless rate rose unexpectedly and that the economy added only 58,000 jobs. Experts believe that the unemployment rate will not improve significantly until the monthly gain in jobs is consistently 300,000 jobs or more. And, at that rate the gains would have to go one for more than two years to bring the economy back to what is traditionally considered a reasonable unemployment figure.

There are several signs that a recession is firmly in place again and that the downturn could last for several quarters. Most are already easy for the average American to see.

1.) Inflation

There is almost nothing that damages consumer confidence as badly as a rapid rise in prices. Starbucks recently increased the price of a bag of coffee by 17 percent because wholesale prices have risen by almost twice that rate in the last year. Cotton prices nearly doubled in 2010 but have fallen this year. But, apparel is made months in advance of when they reach store shelves. Summer clothing prices are up as much as 20 percent. That may change in the fall, but for the time being, the consumer’s ability to buy even the most basic clothing has been undermined. Consumers today pay more for sugar, meat, and corn-based products as well.




2.) Investments have begun to yield less

Part of the recovery was driven by the stock market surge which began when the DJIA bottomed below 7,000 in March 2009. The index has risen above 12,000 and the prices of many stocks have doubled from their lows. As result, American household nest eggs that were decimated by the collapse of the market have rebounded and enabled people to splurge on themselves. However, the market has stumbled in the last quarter. The DJIA is up only 1 percent during the last three months and the S&P 500 is down slightly.

Americans, though, have few other places to put their money. Ten-year Treasuries yield about 3 percent. Gold was a good investment over the last year, but it has begun to falter as well. The market may not be a friend to investors for quite some time.

3.) The auto industry

The auto industry has staged an impressive comeback, although its profitability is based as much on the layoffs it has made over the last five years as generating new sales. GM and Chrysler have emerged from bankruptcy. Year-over-year monthly sales improved late last year and through April. May sales stalled. GM’s revenue dropped by 1 percent compared to May of 2010. Ford’s sales were down about as much. There are many reasons for this trend including high gas prices and the constrained manufacturing capacity of the Japanese automakers because of the earthquake. Consumers also may be deferring big purchases because they are worried about their economic prospects. Slow car sales are not just a sign of lagging consumer confidence. They also may be a harbinger of tougher times ahead. These companies shed several hundreds thousand jobs before and during the last recession. Car firms have only just begun to hire again, but that trend will die with a plateau in sales.

4.) Oil prices

Oil prices are supposed to drop as the economy slows as they did in 2008 and early 2009 when crude fell from over $140 to under $50. That drop at least allowed consumers and businesses like airlines to more easily afford fuel. Recently, crude has moved back above $100 and appears to be stuck there regardless of the economic situation. American budgets have been hurt by the rising cost of gas. Americans of more modest means have been particularly affected. A slowdown in driving usually also leads to a decline in the retail sector as consumers reduce unnecessary travel to stores. The impact on other businesses is just as great. Airlines suffer and so do firms which rely on petrochemicals. OPEC, for now, has signaled it will not increase production.

5.) The federal budget

The federal budget deficit has decimated any chance for another economic stimulus package which many prominent economists like Nobel Prize-winner Paul Krugman say is essential to create a full recovery. His theory has become more of an issue as GDP growth slows to a rate of 2 percent. The first $787 billion Obama stimulus package may have saved some American jobs, but it is long over and did not work if a drop in unemployment and a sharp improvement in GDP were its primary goals. The deficit has caused a call for severe austerity measures which have already become part of the economics policies of countries from Greece to the U.K. to Japan. Job cuts in the U.S. will not be restricted to the federal level.



A recent UBS Investment Research analysis predicted that state and local governments will cut 450,000 jobs this year and next. That process is already well underway. States like California and New York currently run massive deficits and the rates they must pay on bonds has risen accordingly. Newspaper headlines almost daily report on battles between state unions and governors over employment and benefits.

6.) China economy slows

A slowdown in the Chinese economy is usually seen as a cause of global commodity price inflation, but the effects cut two ways. China’s appetite for energy and raw materials may fall. But, the demand for goods and services by its very large and growing middle class drops as well. Chinese purchaser manufacturing and export numbers have fallen as the central government has tightened the ability to borrow money. US exports to China are key to the health of many American businesses.

John Frisbie, the president of The US-China Business Council, recently said, "Over the last decade we have seen exports to China rise from $16.2 billion to $91.9 billion — a 468 percent increase.” As that rate slows, it has a profound effect on tens of thousands of American companies and their employees. U.S. firms with large operations in China are also effected. GM is one of the two largest car firms in China along with VW. Large U.S. corporations like Wal-mart and Yum! Brands rely significantly on China to boost global sales. Without vibrant consumer spending in China, American companies will suffer.



7.) Unemployment

Unemployment creates two immediate problems. People without jobs drastically curtail their spending, which will ultimately affect GDP growth. The second is the need for tens of billions of dollars every year in government aid to keep the unemployed from becoming destitute. That support has increased deficits and the domino effect is that cash-strapped governments need to make more spending cuts. It may be the biggest challenge the economy faces.

Unemployment has worsened because people over 65 to continue to work because the values of their homes — which they once counted on as the financial basis of their retirements — have dropped so sharply. Older Americans also fear that cuts in Medicare and perhaps Social Security are inevitable which increases the cost of their golden years. The jobs that older Americans have taken are often ones that younger Americans might have. People in their 20s must accept low wages to enter the workforce. This has delayed their prime consuming years well into their 30s which will damage GDP recovery now and for another decade.

The worst of the unemployment problem is the roughly 5 million Americans who have been unemployed for over a year. Their unemployment benefits have run out in many cases. The burden of their care falls to their families, friends, community organizations and non-profits. A family which has to support an unemployed person may be a family which cannot spend beyond its basic needs. To the extent that the federal or state governments can support the unemployed, the cost to run support programs increases.

8.) Debt ceiling

The United States debt ceiling, currently at $14.294 trillion, will probably be raised before the government has to cut back essential services on Aug. 2. It might seem that the economic and employment effects of the debt cap are the same as the deficit, but they are actually more insidious and longer term. The first by-product of debt reduction, or at least a slowdown in its growth, is a combination of higher taxes and a lower level of government services. Higher taxes usually slow economic improvements, particularly when they are not coupled with stimulus measures.

A number of economists have pointed out the expense reduction alone will not sharply improve the United States balance sheet. The increase in Medicare and Social Securities costs, brought on by an aging population, are also likely to trigger a need for higher taxes. Tax increases could keep the economic growth of the US on hold for years. The taxation of companies decreases and often eliminates profits, particularly during an already troubled economic period. Profits which disappear usually cause cuts in purchasing and jobs. Taxes on wages and inheritance undermines consumer spending. And, a growth in national debt from already all-time highs will increase the borrowing costs of the U.S. That, in turn, drives up interest rates for everything from mortgages to credit cards.

9.) Access To credit

The lack of access to credit has hurt the economic activity or both individuals and small businesses. Many very large companies can borrow money at rates as low as 2 percent because of their strong cash flows and balance sheets. Banks have been much less willing to loan money to companies with under 100 workers because these firms often rely on a few customers for revenue and usually have very little money on hand.

Early in June, the House Small Business Committee held hearings and among its findings were that concerns about risk and a slow economy has made financial institutions reluctant to lend to small businesses, the main driver of economic growth. Committee Chairman Sam Graves (R-Mo.) said Congress will need to “bridge the gap” between the two sides. There is no plan to accomplish that. Individual borrowers find themselves in a similar position. The cost of credit cards debt is still above 20 percent in many cases although the Federal Reserve loans money to large financial firms for interest rates close to zero.

Potential home buyers, who might help break the gridlock of slow house sales, often find that banks want down payments as high as 20 percent. The median down payment in nine major U.S. cities rose to 22 percent last year on properties purchased through conventional mortgages, according to an analysis done for The Wall Street Journal by real-estate portal Zillow.com. That percentage doubled in three years and represents the highest median down payment since the data were first tracked in 1997. Homes which are not sold often put such great burdens on owners that they are barely consumers of the goods and services that drive GDP. Home builders have continued to struggle. Construction jobs, which were a huge amount of the employment base in states like Florida, have not returned.

10.) Housing

Housing is considered by many economists to be the single largest drag on the American economy, and the housing market has gotten much worse in the last two months. A report from The New York Federal Reserve published early this year said: “When home prices began to fall in 2007, owners’ equity in household real estate began to fall rapidly from almost $13.5 trillion in 1Q 2006 to a little under $5.3 trillion in 1Q 2009, a decline in total home equity of over 60 percent.”

Real estate research firm Zillow reported on more recent developments. “Negative equity in the first quarter reached new highs with 28.4 percent of all single-family homes with mortgages underwater, from 27 percent in Q4.” Many homeowners who want to sell their homes cannot do so because they cannot afford to pay their banks at closing. Whether for good or ill, the American home was the primary source for money used for retirements, college educations and the purchases of many expensive items such as cars.

Economists point out the this leverage helped contribute to the credit crisis as people could not cover the costs of home equity loans as real estate values collapsed. This may be true, but the drop in value happened so quickly that the balance sheets of millions of Americans were destroyed. Their ability to consume was severely damaged, further harming GDP. High mortgage payments bankrupted or nearly bankrupted people who have lost jobs or have found that their incomes had stagnated. The building industry became a shambles overnight. And, whatever the effects have been over the last three years, they are getting progressively worse as home values drop to decade lows. There is no relief in sight because potential buyers worry that price erosion has not ended.


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Obama Vows Debt Ceiling Talks To Continue Until Deal Made

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Obama to lawmakers: Meet every day on debt deal

President Barack Obama told top lawmakers on Sunday to be prepared to meet every day this week to hash out a deal to cut the federal budget and raise the debt limit, a Democratic source with knowledge of the talks said.

The Democratic official said that Obama pressed Republicans at a White House meeting Sunday evening to aim for a broad, $4 trillion deficit-reduction package rather than a more modest one.

"If not now, when?" the president asked them when some said it was not the right time to try to craft a far-reaching deal, the official said.

Both sides remained divided over the size and the components of a plan to reduce long term deficits. Saying "we need to" work out an agreement over the next 10 days, the president and lawmakers agreed to meet again Monday.

Obama also sought to use the power of his office to sway public opinion, scheduling a news conference for 11 a.m. ET Monday, his second one in less than two weeks devoted primarily to the debt talks.

But there appeared to be little appetite for such an ambitious plan and the political price it would require to pass in Congress. Instead, House Speaker John Boehner told the group that a smaller package of about $2 trillion to $2.4 trillion was more realistic.

A Democratic official familiar with the session said House Majority Leader Eric Cantor, R-Va., was especially adamant that any deficit reduction package could not contain tax increases and that any new tax revenue would have to be used to pay for other tax benefits.

Obama and the congressional leaders met in the Cabinet Room of the White House for the rare Sunday session. Most appeared in casual Sunday clothes, with open-collared shirts underneath blazers.

Time running out

When a reporter asked, "Can you work it out in 10 days, sir?" Obama replied, "We need to."

Time is becoming increasing precious in the negotiations. The deficit reduction talks are linked to the government's need to increase its borrowing limit, now capped at $14.3 trillion. The Obama administration says if the debt ceiling is not raised by Aug. 2, the nation would default on its obligations, with potentially calamitous financial consequences worldwide.

Officials familiar with the meeting spoke on the condition of anonymity because of the delicate nature of the negotiations. Officials said Obama time and again pressed for a larger package. He also pointed out that the smaller deal of up to $2.4 trillion still would require tax revenues and that not all of the details had yet been worked out.

Earlier, White House Chief of Staff Bill Daley said in a television interview that Obama would not "walk away from a tough fight."

"Everyone agrees that a number around $4 trillion is the number that will ... make a serious dent in our deficit," he said.

But embedded among the tough words was rhetoric that acknowledged the prospects for the "big deal" had become uncertain at best.

Treasury Secretary Tim Geithner said Sunday on NBC’s "Meet the Press" that Republicans "should not walk away now from trying to do something good for the country."

"We’re going to try to get the biggest deal possible," Geithner said.

It was an abrupt change from 24 hours earlier. Republicans late Saturday rejected the $4 trillion proposal, the largest of three under consideration, because its tax increases would doom it in the GOP-led House, Speaker John Boehner said.

The Ohio Republican informed Obama that a package of about $2 trillion, which bipartisan negotiators had identified but not agreed to, was more realistic.

Senate GOP leader Mitch McConnell of Kentucky left little doubt that the $4 trillion deal was dead.

"I think it is," McConnell said. Raising taxes amid 9.2 percent unemployment, he added, "is a terrible idea. It's a job killer."

The International Monetary Fund's new chief, Christine Lagarde, said that if the U.S. fails to raise its debt limit, she foresees "interest hikes, stock markets taking a huge hit and real nasty consequences" for the American and global economies.

"I would hope that there is enough bipartisan intelligence and understanding of the challenge that is ahead of the United States, but also the rest of the world," she said.

Obama willing to do 'difficult things'

Geithner said Obama “is willing to do very, very difficult political things” including changes in the Medicaid and Medicare programs to reduce future outlays.



He did not specify any changes Obama would consider in those two programs, or in Social Security. Those three programs will account for half of federal outlays by 2021.

The protected debt negotiations took another twist Saturday when Boehner issued a statement saying, that "despite good-faith efforts to find common ground, the White House will not pursue a bigger debt reduction agreement without tax hikes."

Given that impasse, Boehner said, "I believe the best approach may be to focus on producing a smaller measure."

Why GOP leaders need Democratic votes

“Republicans have told us from the beginning they can’t pass a debt limit increase, they can’t pass a budget deal just with Republican votes. They need Democratic votes,” added Geithner.

Wooing enough Democratic members of Congress to vote for a budget deal, Geithner implied, required Republican leaders to accept that some net tax increases would need to be part of any agreement.

“You have to have balance,” he said, indicating an accord which had nearly equal measures of cuts in future spending and increases in revenues.

But at the same time, he said, “we have to find a way to avoid shifting more of the burden of the tax system to the middle class” — which seemed to indicate that any net tax increases would fall only on higher-income people.

He said an extension of the Social Security payroll tax cut, which Congress enacted last December and which is set to expire at the end of this year, would be part of any accord.

That payroll tax cut was intended to stimulate economic growth and spur job creation. But Geithner gave a somber assessment of the economy, saying that "it's going to take a long time still" before many Americans feel that a recovery is under way. "This is still a very tough economy. For a lot of people, it's going to feel very hard — harder than anything they've experienced in a lifetime now — for some time to come."

What happens after Aug. 2

Geithner warned again that if no deficit cutting agreement is reached and if Congress still refuses to increase the government’s borrowing limit, the government will face default on its obligations on Aug. 2 which “would be catastrophic for the American economy.”
Story: Presidential candidates warn about compromise in debt deal

He added, “The longer we go into July, the more risk there will be in financial markets” with increasing fear among investors that America’s political leaders cannot manage the government’s finances. “You’ll see that reflected in higher interest rates and more concern and loss of confidence,” he said.

He said with no ability to borrow more money from credit markets, it would impossible for the government to finance the $100 billion a week in maturing Treasury obligations — while at the same time paying government contractors and sending benefits to those on Social Security, Medicare and Medicaid.

He seemed to reject the idea that Obama would resort to the Fourteenth Amendment to the Constitution to justify Obama borrowing despite having reached the legal limit — a suggestion some Democrats floated in recent weeks. “There’s no constitutional option,” he said.

Obama's goal: a one-third cut in cumulative deficits

Obama’s goal last week of deficit cuts of $4 trillion over the next decade would have been about a one-third cut in the cumulative deficits, according to the Congressional Budget Office’s most plausible forecast.

Obama was said to be open to changes in Social Security, Medicaid and Medicare. One idea reportedly under discussion in the budget talks was a change in the formula used to make the cost-of-living adjustment (COLA) for retirees collecting Social Security benefits so as to reduce payouts to retirees in future decades.

The stakes are high for Obama. His 2012 re-election hopes hinge not only on reducing America's 9.2 percent unemployment but on his appeal to independent voters who want tougher action to get the country's fiscal house in order.

But Boehner and other mainstream Republicans do not want to be blamed for the economic turmoil that could be unleashed by any government default on its debt.

For his part, Obama is risking a mutiny on the left flank of his party for even agreeing to discuss entitlement programs traditionally protected by Democrats and which many feared would have been curbed under a $4 trillion plan.

Aides to Obama and Boehner were also discussing revenue increases that would have been achieved in part by a streamlining of the tax code, something that appeals to both Democrats and Republicans.

But Democrats' demands for $1 trillion in additional revenue also include eliminating tax breaks and other measures that many Republicans were reluctant to support.


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