Initial jobless claims increased by 27,000 to a higher- than-forecast 542,000 in the week ended Nov. 15, from 515,000 the prior week, the Labor Department said today in Washington. The number of people staying on benefit rolls the prior week rose to 4.012 million, the most since December 1982.

Job losses in the U.S. have totaled 1.2 million this year as the economy entered a downturn exacerbated by the worst credit crisis in seven decades. More firings will weigh on the economy and consumer spending, putting pressure on President- elect Barack Obama and Congress to agree on legislation that will stimulate growth…–
http://www.bloomberg.com/apps/news?pid=20601068&sid=axoMU2lh.goE&refer=economies
Comment: The vicious cycle is now in full swing and once it is turning, there won’t be an escape from the downward spiral for a long time. The only thing to wonder about is our leaders’ talent for ignorance - be in government or at the central bank or you name it.
Antony Mueller

That’s problematic. For Keynesian solutions often fail to deliver good or even acceptable results.

The limits start showing up with the tiniest of stimuli, those government checks Americans received in the mail last spring. The idea was that having the cash would cheer up consumers so that they would start shopping again, helping retailers. That in turn would revive wholesalers, shippers, suppliers — on up the production line.

But that stimulus failed, as the University of Michigan’s Joel Slemrod and Matthew Shapiro noted. Interviews with consumers showed that only a fifth said they would spend their cash…–

American International Group (ticker: AIG), which originally had to borrow what was a stunning $85 billion from the Fed to keep it from cratering in September, upped the total Sunday to $150 billion.

Monday, Fannie Mae (FNM) reported a $29 billion third-quarter loss, far in excess of forecasts, raising the specter that the mortgage giant may need more money after the Treasury pledged to inject $100 billion in preferred stock financing in September.

Meanwhile, American Express (AXP) received Fed approval to convert to a bank holding company, joining the likes of Morgan Stanley (MS) and Goldman Sachs (GS), that have a direct pipeline to borrow from the Fed or the Treasury’s TARP, the $700 billion Troubled Asset Relief Program.

And, of course, Detroit is looking for a credit line from Washington. General Motors (GM) Friday warned it could run out of cash next year without a government loan. GM plunged another 23% Monday, to 3.36, as several analysts helpfully recommended selling shares of the beleaguered auto maker that already had lost more than 85% of their value…–

http://online.barrons.com/article/SB122633310980913759.html

This paper argues that although liberalized capital markets do in some way possess an inherent tendency towards instability, almost all cases of severe disturbances in the international capital markets are the result of excessively expansive fiscal and monetary policies, which at some point had to give way to a sharp liquidity contraction. In order to stabilize the system, the monetary and fiscal authorities quite often accelerated expansive measures, exposing investors, lenders and borrowers to misleading interest rate and price signals which resulted in a postponement of the adaptation process and in a number of cases to the prolongation of stagnation. Given the international integration of modern financial markets, misplaced monetary and fiscal policies cause various international spillover effects. Repeated bailouts of borrowers and creditors by central banks, governments and international institutions have led to the persistence of moral hazard as the assumption of implicit guarantees to stabilize financial markets has lowered the perception of risk and resulted in over-exposure.

This analysis leads to the conclusion that while more strict regulations might be applied to off-balance financial innovations and that capital adequacy norms should be more strictly enforced on an international level, further direct control seems to bring more harm than good and deflect the attention from the causes of financial instability which are the inadequate control of liquidity.”

Fonte: http://www.iwp.uni-koeln.de/DE/Publikationen/zfw/1-01/mueller.htm

Reforming the World Financial Order. Institutional and Theoretical Aspects .
Zeitschrift für Wirtschaftspolitik 50 (2001), Nr. 1, pp. 15-34

The dollar’s days as the world’s reserve currency are numbered, Rogers said at the World Money Show conference in London.

The greenback faces serious devaluation as spiraling national debt and a worsening economic crisis undermine it, he said.

America’s growing debt problem is “out of control” and Federal Reserve Chief Ben Bernanke’s strategy of printing money is a “terrible policy,” he said.

Bernanke “does not understand economics, he does not understand markets … he is going to run those printing presses until we run out of trees,” he added…–
http://www.cnbc.com/id/27717135/print/1/displaymode/1098/

But precious little of this additional liquidity is finding its way through to households and corporate borrowers. In fact, most of it is now sloshing around the banking system like so much excess ballast.

Banks have increased their reserve holdings on deposit with the Fed from $8 billion to $494 billion. This is $488 billion more than the Fed estimates they would ordinarily need to hold for payment clearing and prudential purposes.

Increased reserve holdings have absorbed perhaps half of the liquidity placed into the banking system from the Fed. Much of the rest has almost certainly been invested into the mountain of Treasury bills the U.S Treasury has been issuing. Only a very small proportion is left for re-lending to the real economy…”–
http://blogs.reuters.com/great-debate/2008/11/13/tarp-and-fed-facilities-unravel/

The third-quarter net loss widened to $25.3 billion, or $19.44 a share, McLean, Virginia-based Freddie said in a regulatory filing today. The losses forced Freddie to request government funds and the company said it expects to receive the money by Nov. 29…–
http://bloomberg.com/apps/news?pid=20601087&sid=a2cWgMcVMLGw&refer=home