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Jeff Horwich: When I first sat down this morning, European stocks were heading for another lousy day. But then a bolt out of the blue: the head of the European Central Bank said the ECB will do "whatever it takes" to preserve the euro. Mario Draghi's comments were like a cortisone shot of confidence for investors. For more on what muscle the ECB can really bring to bear here, Marketplace London bureau chief Stephen Beard is with me live. Hello, Stephen.
Stephen Beard: Hello Jeff.
Horwich: What specifically did Draghi say that markets are so excited about?
Beard: Well not a lot really. He hinted at a new, more activist role for the European Central Bank in combatting the crisis. The markets got excited because investors now believe the only institution that can really stop this crisis in its tracks is the European Central Bank. It's the only body with the firepower to stop the speculation against Italian and Spanish government bonds and against the euro itself.
Horwich: So this is not a sure thing, but if the ECB stepped in, what precisely could it actually do?
Beard: It could behave more like the Fed and print more money, pump a lot more cash into these government bond markets. That would certainly bring down borrowing costs in Spain and Italy. The ECB could give the bailout fund a banking license so that the fund could borrow really huge sums of money to do the same thing, to buy directly large quantities of Spanish and Italian government bonds. The ECB could in theory do these things, but it won't be easy.
Horwich: Right. What obstacles might be in the way?
Beard: Germany, in a word. The Germans don't really like this. They fear that this would let the Southern Europeans off the hook. It would relax the pressure on the Italians and the Spanish and the Greeks to reform their economies and get their public finances into shape. The Germans say without radical, even painful reform in these countries, the problem will reemerge and the crisis will resume at a later date.
Horwich: Marketplace's Stephen Beard, thank you very much.
Beard: OK Jeff.
Aldous Huxley imagined a world in which the Status Quo satisfies its lust for power by "suggesting people into loving their servitude."
Yesterday I discussed the Convergence of Marx, Orwell and Kafka as a means of understanding the global crisis. It's not just financial fraud on a vast scale, or debt or leverage or derivatives or a hundred other arcane mechanisms of parasitic predation; it's the partnership of a mindlessly expansive Central State with Monopoly Capital and the media machine that serves them.
I considered including Aldous Huxley in the convergence, as he too anticipated the essential nature of modern life. But perhaps his insights are more complementary than convergent, for he understood the media and State's capacity to not only present a deranged and
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ECB President Mario Draghi commented in a speech today that the ECB was "ready to do whatever it takes" within its mandate to preserve the single currency.
I have to ask, is that even news? Apparently it it to the stock market which has gapped up over a percent. Bond yields in Spain also reacted to the non-news.
Yield on the 10-year Spanish bond fell all the way (drum roll please) to 6.95%. Is that really anything to be giddy about?
Let's take a look at additional Draghi comments as
Read more: Mish's Global Economic Trend Analysis
WASHINGTON (Reuters) - Contracts to buy previously owned U.S. homes unexpectedly fell in June as fewer properties came on the market, an industry group said on Thursday, pointing to weak home resales in July.
Read more: Reuters: Top News
(Reuters) - Exxon Mobil Corp, the world's largest publicly traded oil company, posted lower-than-expected quarterly earnings on Thursday as its oil and gas output sagged and its chemicals business struggled.
Read more: Reuters: Top News
Student Transportation, Inc.
We believe NASDAQ and TSE-listed Student Transportation (STB or “the Company”) has a flawed business and financial strategy. It has undertaken a leveraged and dilutive acquisition spree that is not accretive to shareholders, but that tremendously benefits…
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“To the extent that the size of the these sovereign premia hamper the functioning of the monetary policy transmission channel, they come within our mandate…Within our mandate, the ECB is ready to do whatever it takes to preserve the euro…and believe me, it will be enough,” said ECB Pres Mario Draghi at around 6am at [...]
Read more: The Big Picture
WASHINGTON (Reuters)- - New orders for a range of long-lasting manufactured goods fell in June and a gauge of planned business spending plans dropped, pointing to a slowdown in factory activity.
Read more: Reuters: Top News
…
GTalk or Google Talk, one of the popular instant messaging services by Google Inc (NASDAQ:GOOG) has suffered a massive outage today. The service used by millions across the world is down in several parts of the world.
Google confirmed the
Read more: ValueWalk
(Reuters) - Exxon Mobil Corp, the world's largest publicly traded oil company, posted lower-than-expected quarterly earnings on Thursday as oil and gas output declined and its chemicals business struggled.
Read more: Reuters: Top News
It's been a little over a year since Anders Breivik committed the greatest act of terrorism in Norway's history. The response to the horrific violence was completely unexpected. In a world where most countries would consider drafting major legislation and beefing up security, Norway's response seemed almost out-of-touch with the "real world."
Prime Minister Jens Stoltenberg pledged to do everything to ensure the country's core values were not undermined. "The
Read more: Techdirt.
WASHINGTON (Reuters) - The number of Americans filing new claims for jobless benefits fell last week to near a four-year low but an unusual pattern for summer factory shutdowns kept hopes in check that the weak labor market was improving.
Read more: Reuters: Top News
As it turns out, baby boomers who were white with high school diplomas (and no college) were better able to find jobs and keep employed even compared to university graduates. The time period covered by this study was from 1978-2010.
Read more: Implode-Explode Heavy Industries news feed
South Korea’s economy rose by the slowest pace in 3 years. GDP rose by +2.4% in the 2nd Q on an annual basis (or +0.4% on a Q/Q basis), lower than the 2.5% expected. With approximately 50% of its economy dependent on exports, S Korea is facing significant headwinds, given the slowing global economy. The [...]
Read more: The Big Picture
Fewer Americans than forecast filed first-time claims for unemployment insurance payments last week, extending the period of volatility typically seen in July.Applications for jobless benefits decreased by 35,000 in the week ended July 21 to 353,000, Labor Department figures showed today. Economists forecast 380,000 claims, according to the median estimate in a Bloomberg News survey. Changes in the annual auto plant shutdowns that occur this time of year have made it difficult to adjust the data for seasonal variations, the Labor Department has said.
Read more: Implode-Explode Heavy Industries news feed
David E. Hultstrom of Financial Architects submitted this list in response to our Checklist of Errors, and its a good one. Enjoy . . . ~~~ I am a long-time reader and thought I could contribute usefully to your checklist, but I don’t want to post – in part because what I want to share [...]
Read more: The Big Picture
Both the New York Fed and the Bank of England have recently released emails and other documents suggesting that they knew Libor could be gamed and was at best not reliable. Here's a timeline laying out how the New York Fed and the Bank of England handled evidence of Libor manipulation back during the financial crisis.
Read more: Implode-Explode Heavy Industries news feed
Stacey Vanek Smith: The Olympic Games get under way tomorrow. There's a big technology and social media push this year.
Rory Cellan-Jones joins me now. He's the BBC's technology correspondent. Good morning Rory.
Rory Cellan-Jones: Good morning.
Smith: So tell me about the latest in Olympic technology. What are some of the hot items being tested at this year's Games?
Cellan-Jones: Well, this is probably the first social media Olympics. And it's also the first app Olympics -- lots of applications being used by spectators and the athletes themselves to try to get an edge on their rivals. I've heard of the British boxing team, for instance, using a clever app which has analyzed all of their rivals' potential moves so that they can know what to expect where the next punch is coming from. And also lots of applications out there for spectators to use to really get a grip on what's happening in the games.
Smith: And from what I understand, too, a lot of athletes are gaining a bigger audience and fans by tweeting and making friends on Facebook and things like that.
Cellan-Jones: That's absolutely right. In fact, the International Olympic Association has set up a social media hub; it's encouraging people to use Facebook and Twitter to communicate with their fans. Although of course, there are dangers in that; and they're also being warned about the pitfalls of saying inappropriate things on those networks and getting into trouble.
Smith: Visa is a longtime Olympic sponsor, and from what I understand, they have plans for a cashless Olympics?
Cellan-Jones: Yes, they've issued a number of smartphones with payment technology inside them where you'll be able to pay at the Olympic venues for goods and services. Now, this is a bit of an experiment. It has to be said that we've been expecting mobile money to come along and be a real force in the world for some time; it's been very slow to arrive and I think Visa is hoping that the Olympics will give this a bit of a push. It must be said I think they wanted it to be a cashless Olympics -- but of course, that's not going to happen, because most people just don't have the technology to make that work.
Smith: Do you have to buy a special phone, or is it an app you can download on your mobile phone?
Cellan-Jones: At the moment, you have to have a special phone with this program installed. But this should become more widely available. And as I said, they're hoping the Olympics will showcase this and it will convince skeptical consumers that there is worth to this.
Smith: Rory Cellan-Jones is the BBC's technology correspondent. Rory, thank you.
Cellan-Jones: Thank you.
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Stacey Vanek Smith: Facebook releases its quarterly earnings later today. It's the social network's first earnings report since it started selling stock in May.
Victor Anthony joins me now from Topeka Capital Markets. Good morning, Victor.
Victor Anthony: Good morning.
Smith: Now, Victor, this is the first earnings report since Facebook went public. What are you going to be looking for?
Anthony: Well, the first thing I'm going to be looking for is their revenues. I think that's top of the mind for most investors. Typically, when a company comes out for the first time after they've IPO'd, it's difficult to project the expenses they'll incur in that quarter. And so, I'm being somewhat more conservative on the earnings.
Smith: What about some of the new potential sources of revenue -- things like the storefronts, and people voting through Facebook? I mean, are we seeing Facebook expanding in ways that will be profitable, or is it just going to gain momentum through channels it's already got -- namely, selling ads using our profile information?
Anthony: Yeah. So, my long-term thesis on Facebook is -- why I'm bullish on the company, irrespective of the numbers they report tonight -- I see them adding a e-commerce business. I see them adding a social search business. You know, they've also been talks about Facebook being spread into online job postings. So I see a lot of these additional monetization opportunities for the platform.
Smith: You know, one of the reasons that Facebook has been under so much scrutiny is that it valued itself so much higher than its current earnings. Can it really make all of this money that it's claimed?
Anthony: That's a good question. And relatively new media companies like Facebook, they tend to be valued at high multiples. As long as they deliver on the growth expectations, I see them expanding, as I stated, into e-commerce and all the additional vertical platforms that's likely to add to the growth trajectory of the business. So, I'm confident that they're able to deliver on that growth expectation to justify that multiple that they're currently trading at.
Smith: Victor Anthony is an analyst with Topeka Capital Markets. Victor, thank you.
Anthony: Thank you very much.
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