Please refer to the story below:
Portugal will be the next Greece, predicts Mohamed El-Erian (The Guardian)
El-Erian, who is also co-chief investment officer of Pimco, said he expected Portugal’s first bailout package to be insufficient, prompting it to ask the EU and IMF for more money.
“Then there will be a big debate about how to split the burden between the EU, creditors, the IMF and the European Central Bank. And then financial markets will become nervous because they are worried about private sector participation,” he said.
Lets look at the unemployment rate in Greece and Portugal (thanks to Google, it is much easier). As a note, I am trusting Google data feed for now, but I plan to take a look into where the data is coming from for future analysis.
The unemployment numbers are minimized by Governments, and growth is usually exaggerated. Given the current polticial situation in the Euro Zone (aka Shit), it seems that Mohammad El Erian is correct in making that call for Portugal following Greece’s path. The next question is, what other countries will follow Portgual?
I found another fun “Debt” clock – thanks to The Economist. Check it out here. (The funny thing is that Greece has 141% debt to GDP ratio, Portugal: 94.6%, Spain: 78.4%, Italy: 121.6%, France: 92.5%, Germany 77.8%). As the debt increases for one country, then it has to be an asset (loan out by) another country, which will be Germany in most of the cases. Is the last card Germany?
I have been away for the last two weeks. I was travelling in California and got to meet some fascinating (and extremely friendly) people there. There were a few things that caught my eye during my travel, first of it being the high unemployment rate in the region and the wealth distribution in the richer areas (such as L.A and San Franciso). I noticed a lot of homeless people in San Franciso, which is a bit odd since it is a bustling city with somewhat higher wages than the rest of the country. I deduced from a discussion with my taxi driver (yes, I talk to people as well, as compared to just looking at charts and graphs!) that he loved San Franciso because he was getting paid so much more even with higher than average expenses.
Looks like I need to do some more research.
Shut eye time!
Nearly 40% of Europeans suffer mental illnesses (Reuters)
Unemployed face tough competition: underemployed (AP)
Feds sue big banks over sale of risky assets (AP)
California employment at record low (Bloomberg)
Wealthy use auctions to sell U.S mansions after price cuts fail (Bloomberg)
Twenty-year old coder’s Greplin is one smart search engine (Bloomberg)
The numbers for August are rosy (for now). There was plenty of bad news in August, and fears of recession and job uncertainty. However the sad part is that the households kept shopping in August and the revenue amongst the biggest 26 retailers jumped by 4.6% (for stores that were open for more than a year). However we still need to know how much was it due to inflation, and how much was organic revenue growth. The reason we look for consumer spending is that it is the driving force behind the U.S economy, i.e 70% of the U.S economy. But we have yet to decipher the underlying factors for the increase in revenues for these stores. It may be that the consumers have been spending what they have been saving for the last 6 months (the average U.S household debt has been on the decline for the last 6 months).
The job numbers are coming in tomorrow morning (Friday, September 2nd). The market expects 93,000 jobs to be created in August, which will not be sufficient to bring the unemployment down, but still better than what we had earlier in June (expectation of 118,000, actual 52,000).
Fewer people applied for unemployment benefits last week. The market has been short-sighted and it is looking for any positive number. Media outlets have emphasized this statistic of unemployment benefits, however one week is not sufficient, given that the unemployment benefits have been extended to 99 weeks.