.
Greece will get a short stay of execution.

http://www.bbc.co.uk/news/business/

23 August 2012 Last updated at 22:22 ET

Greece urged to stick to reforms

The leaders of Germany and France have told Greece it should not expect leeway on its bailout agreement unless it sticks to tough reform targets.

Eurozone 'heading for recession'

Falling output from the eurozone's manufacturing and services sectors suggest the region is heading for another recession, analysts say.

US manufacturing sees weak growth

Growth in the US manufacturing sector remained weak during August, according to a closely-watched survey.

Greece bailout: Athens urged to stick with reforms

"The leaders of Germany and France have told Athens it should not expect leeway on its bailout agreement unless it sticks to tough reform targets.

German Chancellor Angela Merkel and French President Francois Hollande have met to discuss whether Greece should have more time to make spending cuts.
The pair will also meet Greek Prime Minister Antonis Samaras this week.
He wants more time for Greece to complete reforms that are a condition of continuing to receive bailout loans.
The "troika" of donor bodies monitoring the bailout - the International Monetary Fund (IMF), the European Central Bank (ECB) and the European Commission - are due in Athens next month.
Greece's continued access to the bailout packages depends on a favourable report from the trio.
"For me, it's important that we all stand by our commitments, and in particular await the [publication of] the troika report, to then see what the result is," Mrs Merkel said.
"But I will encourage Greece to follow the path of reform, which demands a lot of the Greek people."
And Mr Hollande said he hoped Greece would remain within the eurozone, but added that "of course Greece must make the necessary efforts for this to happen".

On Wednesday, eurozone chief Jean-Claude Juncker kept the door open for a change to the bailout terms after meeting Mr Samaras.

The economy of heavily-indebted Greece remains stuck in recession.
The country is currently trying to finalise a package of 11.5bn euros (£9.1bn: $14.4bn) of spending cuts over the next two years.
It is also being asked to put in place economic and structural reforms, including changes to the labour market and a renewed privatisation drive.
The measures are needed to qualify for the next 33.5bn-euro instalment of its second 130bn-euro bailout.
Greece needs the funds to make repayments on its debt burden. A default could result in the country leaving the euro.
'Tremendous efforts' Mr Samaras is seeking an extension of up to two years for the painful steps, in order to provide Greece with the growth needed to improve its public finances.
In an interview published on Wednesday, he told Germany's biggest daily, Bild, that his country needed "a little breathing space" in order to kick-start growth and reduce its deficit.

After meeting Mr Samaras on Wednesday, Eurogroup head Jean-Claude Juncker said a decision on an extension would depend on the troika's report.

"We have to discuss the length of the period and other dimensions," Mr Juncker told a news conference, while sitting alongside Mr Samaras.
He said Greece was facing its "last chance" to make the necessary changes, but praised the "tremendous efforts" it has made so far to cut its deficit. He also stressed he was "totally opposed" to Greece leaving the euro.
Mr Samaras called the discussions "fruitful".
At least publicly, many EU leaders remain resolutely opposed to any moves to change the terms of Greece's bailout.
But Mr Juncker's remarks suggest there is room for manoeuvre and that an extension has not been ruled out, says the BBC's Stephen Evans in Berlin.
Mrs Merkel has said that she and Mr Samaras will not make any decisions on the issue in their talks on Friday. Mr Samaras goes on to meet Mr Hollande on Saturday.
On Wednesday, Mr Hollande also discussed Greece with British Prime Minister David Cameron in a telephone call."

http://www.telegraph.co.uk/finance/financialcrisis/9496029/Fed-joins-stimulus-party-as-global-trade-slumps.html

By Ambrose Evans-Pritchard

9:52PM BST 23 Aug 2012

"The US Federal Reserve appears poised for a third round of quantitative easing (QE) as soon as early September, joining Europe and China in concerted global stimulus.

The Fed’s latest minutes show broad support for fresh bond purchases – probably mortgage bonds – unless signs of “substantial and sustainable strengthening” emerge soon. Paul Ashworth from Capital Economics said QE3 looks like a “done deal” since little is likely to change between now and the next Fed meeting.

Bond purchases would inject cash at the wrong level of the economy.

The result would be a spike in equities and gold along with bigger bank balances.

The shift in Fed policy caught markets by surprise and comes after the European Central Bank’s chief Mario Draghi opened the door to potentially “unlimited” purchases of Italian and Spanish bonds to prevent a euro break-up.
This would be the result of a Greek exit.

The most radical moves appear likely from China where the managed “soft-landing” risks spinning out of control, with exports contracting on a month-to-month basis over the summer.

“People should worry less about Europe right now and look more closely at Asia,” said Hans Redeker, currency chief at Morgan Stanley. “We think the Bernanke and Draghi 'puts’ will drive a further rally in global equities. But China represents the biggest risk to our bullish asset call.”
Lack of external demand. Western consumers are broke.

The move to full throttle by global authorities comes as the latest shipping data confirmed fears that large parts of the global system buckled in the mid-summer.
“Global trade is contracting at the fastest pace since 2008,” said Stephen Jen from SLJ Macro Partners. “The exports of Korea, Taiwan and Japan are contacting, and China is in stark deceleration.”
Container shipping volumes to Europe fell 9pc in June from Asia and 7.5pc from North America. The CPB World Trade Monitor in the Netherlands shows that trade volumes have been shrinking for the last five months. The Baltic Dry Index measuring freight rates for bulk goods has crashed to Great Recession depths.
The long-awaited rebound in China has yet to materialise. China’s HSBC manufacturing index fell further below the contraction line of 50 to 47.8 in July, with export orders plunging and output prices sliding deeper into deflation. “The report is plainly awful,” said Yao Wei from Societe Generale.
Money market rates in China have jumped 20 basis points since July, overwhelming efforts by the central bank to inject liquidity. “Capital is fleeing the country,” said Morgan Stanley.
Andrew Roberts, head of credit at RBS, said the moves in the Chinese money markets have become a neuralgic issue in the City. “People are asking whether this is the beginning of a credit crunch in China,” he said.
China’s Politburo is taking no chances. It has ditched a key plank of its reform strategy for now, reverting to blunderbuss spending on infrastructure and new factories to keep the crisis to bay.
Earlier this week the city of Chongqing unveiled a $240bn blitz on cars, chemicals and other industries over the next three years, equal to 150pc of its GDP and to be financed by state banks. Tianjin has followed with $240bn (£151bn) over five years on aeronautics, heavy equipment, and energy; Guangdong has listed 177 projects worth $160bn.
Keynesian support.
In America, the fresh stimulus by the Fed may raise eyebrows. The US economy has recovered slightly after slowing to stall-speed earlier this summer, Goldman Sachs tracking growth of 2.3pc in the third quarter.
Core inflation is above 2pc and the M3 “broad” money supply is growing at a robust pace of around 5pc, though this may be distorted by flight to safety. “People are still hoarding money because of the chronic lack of confidence,” said Capital Economics’ Mr Ashworth.
These are not normally conditions that call for printing money. The Fed is clearly taking precautions in case of multiple shocks ahead, including a mini-crisis in Washington as the “fiscal cliff” looms at the end of the year. The Congressional Budget Office says the US faces a “significant recession” next year if automatic fiscal tightening equal to 4pc of GDP goes ahead.
Yet the Fed is also acting as a superpower central bank, moving early to head off any risk of a global downward spiral. Chicago Fed chief Charles Evans called yesterday for fresh stimulus “around the world”.
Central banks can certainly buy time and trigger powerful asset rallies. Whether they can counter the deeper malaise of excess global savings – a record 24pc of GDP – or excess manufacturing plant worldwide is a larger question. It tormented economists in the 1930s, and has come back to haunt them today."

http://www.telegraph.co.uk/finance/financialcrisis/9495550/Debt-crisis-Merkel-tells-Germans-to-remember-the-euro-dream-ahead-of-crisis-summits.html

"The German chancellor today launched a bold marketing campaign with the slogan: “I want Europe”.

“Europe is not just a matter of the intellect – Europe is and remains above all a matter of the heart,” she said in a video clip which launched a nationwide campaign. She added: “We have [European integration] to thank for our peace, our prosperity.”

The campaign was backed by German companies, as well as celebrities, sports stars, former politicians and ordinary workers. Their clips ended with the phrase: “They know why Europe is good for us.”

A raft of gloomy economic data showed why the rest of Germany needed the reminder. Manufacturing and services data showed that the powerhouse economy’s private sector shrank for the fourth month running in August.

Foreign orders sank at the fastest rate for three years, and economists once again warned that the eurozone was almost certainly heading for a technical recession. Ms Merkel met tonight with the French president, Francois Hollande, to discuss how to handle Greece’s request for extra time to meet its austerity targets, which is expected to be given short shrift.

Wolfgang Schäuble, Germany’s finance minister, flatly rejected Greece’s plea, while Mr Hollande insisted Greece must stick to promised reforms to remain in the single currency.
The Greek prime minister Antonis Samaras will meet Ms Merkel in Berlin tomorrow and Mr Hollande in Paris tomorrow.
Meanwhile, traders continued to watch Spain with alarm after reports suggested that officials in Madrid were preparing to request an official bail-out from Brussels. The reports said Madrid was ready to accept an injection of cash from the European Financial Stability Mechanism."

http://www.nytimes.com/2012/08/24/opinion/krugman-galt-gold-and-god.html?_r=1&ref=opinion
Professor Krugman does not write of Europe.
Presumably there is nothing to add.

"So far, most of the discussion of Paul Ryan, the presumptive Republican nominee for vice president, has focused on his budget proposals. But Mr. Ryan is a man of many ideas, which would ordinarily be a good thing.In his case, however, most of those ideas appear to come from works of fiction, specifically Ayn Rand’s novel “Atlas Shrugged.” For those who somehow missed it when growing up, “Atlas Shrugged” is a fantasy in which the world’s productive people — the “job creators,” if you like — withdraw their services from an ungrateful society. The novel’s centerpiece is a 64-page speech by John Galt, the angry elite’s ringleader; even Friedrich Hayek admitted that he never made it through that part. Yet the book is a perennial favorite among adolescent boys. Most boys eventually outgrow it. Some, however, remain devotees for life.

And Mr. Ryan is one of those devotees. True, in recent years, he has tried to downplay his Randism, calling it an “urban legend.” It’s not hard to see why: Rand’s fervent atheism — not to mention her declaration that “abortion is a moral right” — isn’t what the G.O.P. base wants to hear.

But Mr. Ryan is being disingenuous. In 2005, he told the Atlas Society, which is devoted to promoting Rand’s ideas, that she inspired his political career: “If I had to credit one thinker, one person, it would be Ayn Rand.” He also declared that Rand’s work was required reading for his staff and interns.

And the Ryan fiscal program clearly reflects Randian notions. As I documented in my last column, Mr. Ryan’s reputation for being serious about the budget deficit is completely undeserved; his policies would actually increase the deficit. But he is deadly serious about cutting taxes on the rich and slashing aid to the poor, very much in line with Rand’s worship of the successful and contempt for “moochers.”

This last point is important. In pushing for draconian cuts in Medicaid, food stamps and other programs that aid the needy, Mr. Ryan isn’t just looking for ways to save money. He’s also, quite explicitly, trying to make life harder for the poor — for their own good. In March, explaining his cuts in aid for the unfortunate, he declared, “We don’t want to turn the safety net into a hammock that lulls able-bodied people into lives of dependency and complacency, that drains them of their will and their incentive to make the most of their lives.”

Somehow, I doubt that Americans forced to rely on unemployment benefits and food stamps in a depressed economy feel that they’re living in a comfortable hammock.

But wait, there’s more: “Atlas Shrugged” apparently shaped Mr. Ryan’s views on monetary policy, views that he clings to despite having been repeatedly, completely wrong in his predictions.

In early 2011, Mr. Ryan, newly installed as the chairman of the House Budget Committee, gave Ben Bernanke, the Federal Reserve chairman, a hard time over his expansionary policies. Rising commodity prices and long-term interest rates, he asserted, were harbingers of high inflation to come; “There is nothing more insidious that a country can do to its citizens,” he intoned, “than debase its currency.”

Since then, inflation has remained quiescent while long-term rates have plunged — and the U.S. economy would surely be in much worse shape than it is if Mr. Bernanke had allowed himself to be bullied into monetary tightening. But Mr. Ryan seems undaunted in his monetary views. Why?

Well, it’s right there in that 2005 speech to the Atlas Society, in which he declared that he always goes back to “Francisco d’Anconia’s speech on money” when thinking about monetary policy. Who? Never mind. That speech (which clocks in at a mere 23 paragraphs) is a case of hard-money obsession gone ballistic. Not only does the character in question, a Galt sidekick, call for a return to the gold standard, he denounces the notion of paper money and demands a return to gold coins.

For the record, the U.S. currency supply has consisted overwhelmingly of paper money, not gold and silver coins, since the early 1800s. So if Mr. Ryan really thinks that Francisco d’Anconia had it right, he wants to turn the clock back not one but two centuries.

Does any of this matter? Well, if the Republican ticket wins, Mr. Ryan will surely be an influential force in the next administration — and bear in mind, too, that he would, as the cliché goes, be a heartbeat away from the presidency. So it should worry us that Mr. Ryan holds monetary views that would, if put into practice, go a long way toward recreating the Great Depression.

And, beyond that, consider the fact that Mr. Ryan is considered the modern G.O.P.’s big thinker. What does it say about the party when its intellectual leader evidently gets his ideas largely from deeply unrealistic fantasy novels?"

Wednesday, August 22, 2012

Are Ambercrombie & Fitch’s Difficulties in Making Sex Sell an Economic Portent?

Since I can’t get worked up enough about the latest Fed minutes (short story: Mr. Market is unhappy because he wants his QE and doesn’t see evidence that it is imminent), it might instead be worth examining something quite curious: that Ambercrombie & Fitch is having trouble making sex sell.
You have to understand what a total fail that is. The advertising industry is largely devoted to using sex, either overtly or covertly, to get consumers to buy stuff. This is most true for products like clothing for target customers under, say, 50, cosmetics, and accessories. Just flip through the front of a Vanity Fair or a fashion magazine. I avoid them precisely because you get an overload of messages of how cool it would be to be somebody else. For women, that’s a size two woman with pouty lips and often drugged out looking eyes whose life aspiration is to be kept by (and per the subtext of some ads, dominated by) a rich man (as in they are clearly attired in a manner they couldn’t pay for themselves). The message for men is a bit more confused. You now see men treated as sex objects too, starting with those Men’s Health covers. Do you want to know what it takes to look like that? Bodybuilders prepare for MONTHS for contests, with the last six weeks a dieting down to get cut (they live on chicken breasts, egg whites, broccoli and it seems not much else) and the days before the shoot, diuretics. One slice of pizza after the contest, and it’s over. The lesser version, the ripped abs, can often be helped along with meth (the last Gay Pride parade I attended, a buddy of mine could pick out which of the boys displaying a lot of skin had achieved their cut with meth, it produces a very specific look that you see a lot among male models).
In my youth, hemlines were seen as a leading economic indicator. Recall the miniskirts of the 1960s, versus the dowdy below the knee length of the 1970s? That’s now broken down since women have more latitude regarding attire than they once did. Nevertheless, as Lynn Parramore pointed out in a recent Alternet article, being worried about money is an anti-aphrodisiac. So the real question is whether Ambercrombie & Fitch’s tsuris are company specific, or a sign of how the lousy economy is undermining libido to such a degree that people won’t spend as much as they used to on hopes of getting laid.
Bloomberg sees the problem as generational, as an outbreak of excessive individuality, the bane of a producer of branded products:

Today’s teens are underwhelmed by the half-naked models and blaring, dimly lit stores. And they’re less inclined to wear Abercrombie’s uniform of denim and graphic Ts….
Today’s teens are “radically different” from other generations, including Millennials now in their 20s, because they are rejecting uniforms, according to Marcie Merriman, founder of retail and brand strategy consultancy PrimalGrowth in Columbus, Ohio.
Dubbed Generation C — for creative and connected — they have a bevy of clothing options thanks to the boom in fast- fashion from Forever 21 Inc. and Hennes & Mauritz AB’s H&M…Gen C also has developed a more individual style from the Web and social media, she said.
Abercrombie must “look at ways to tie in with this creative class in a way that their brand will continue to resonate,” Merriman said. “They’re positioned well to take advantage of this group’s desire to be rebellious and indie and different, because that’s what the brand is about, but right now the product mix doesn’t communicate that or facilitate it.”

I can’t relate to this since I’ve hated prevailing fashion for the last 20+ years. Even skinny cute girls who look good in the stuff you see in store windows would look better in something else. At the same time, I’m not sure I buy this “individualism” as a product of creativity as much as necessity. For the last few years, it’s been fashionable to make your own clothes. Huh? It takes a lot of skill to tailor well; in fact, one of the status markers of bespoke and haute couture is the tailoring. Since I always hated art classes, I can’t relate to craft impulses, but this trend strikes me as at least in part borne of necessity: if you are short on dough and long on time, you can either make or tart up inexpensive to mid range clothing for less than it would cost off the rack.
What is your reaction? Is Ambercrombie just a one trick pony that has become stale and is having trouble adjusting, or an indicator of our zombified economy?

Read more at http://www.nakedcapitalism.com/2012/08/is-ambercrombie-fitchs-difficulties-in-making-sex-sell-an-economic-portent.html#fTzVUvm84QD2uHbt.99

http://www.athensnews.gr/portal/11/57826

23 Aug 2012

Wolfgang Schaeuble (R) says extra time is not a panacea while Angela Merkel said there wil be no decisions on Friday (Reuters)

Angela Merkel and Francois Hollande will present a united front towards Greece at talks on Thursday, telling Antonis Samaras' government not to expect any leeway on its bailout agreement unless it sticks to its terms.

The German and French leaders are meeting to fine-tune their message to Samaras, who begins a charm offensive trip to Berlin and Paris on Friday in the hope of persuading Europe's big powers that Greece deserves patience.

Samaras has been giving interviews to German media stressing that while Athens may seek more time to meet austerity targets, it was not asking for more money from partners. But German Finance Minister Wolfgang Schaeuble sounded a stern note.

"More time is not a solution to the problems," Schaeuble told German radio, addressing Samaras' hopes that his country might be given four years instead of two to push through painful austerity, to alleviate the impact on the population.

Schaeuble warned that more time could also mean "more money" and added that Europe's help for Greece had already "gone to the limits of what is economically viable".

European leaders say any decisions on Greece will depend on a report next month on its progress by the troika.

Merkel receives Samaras on Friday and Hollande receives him on Saturday, at a moment of rare optimism on financial markets that the European Union - especially the European Central Bank - is poised for decisive action on the eurozone debt crisis.

Merkel herself poured cold water on hopes for far-reaching concessions on Wednesday, saying during a trip to Moldova that she was "going into these talks with the awareness that we have to achieve that every partner sticks to his commitments".

But behind the stern public message, Berlin and Paris may have little choice but to give Samaras what he called "a bit of air to breathe". There is little appetite in either capital for forcing Greece out of the eurozone.

After Merkozy

Merkel and Hollande will try to project confidence they can go some way towards replicating the "Merkozy" alliance that gave the eurozone some semblance of unified leadership under Hollande's predecessor Nicolas Sarkozy.

The Franco-German axis has been strained by Hollande's calls for more measures to stimulate growth, a rebuff to Merkel's strict agenda of austerity.

"It's not just about balancing budgets, although we must hold to that, it's also about growth," French Prime Minister Jean-Marc Ayrault said of Hollande's visit.

Some German officials say Merkel's relationship with Hollande is off to a rocky start, which might explain why they will give only a brief statement at 8pm before they meet, rather than a full news conference after their talks.

As she prepares to campaign for a third term in power in 2013, in a country where the media is taking an increasingly tough line with Greece, she cannot cede too much to Samaras - or to Hollande's new French Socialist government, which is allied to her main domestic opponents, the Social Democrats.

With German patience wearing thin after repeated requests for financial help from Greece, Spain, Portugal and Ireland, Merkel is under pressure to defend taxpayers' interests while also upholding the stability of the currency.

After Hollande managed to weigh down Merkel's European pact for budget responsibility with pro-growth measures, Merkel will be watching closely his attempts to meet his own deficit targets with spending cuts and tax measures, German officials say.

"If Hollande gives up on his targets because of rising domestic political resistance, we can hardly expect more painful reforms from states like Italy or Spain," said one government source in Berlin, speaking on condition of anonymity.

Still, both leaders aim to show unity on Greece. One Hollande aide said the president "has always maintained it is indispensable for Greece to respect its commitments, while at the same time it should be given hope for growth".

There are signs that Merkel's conservatives, if not ready to postpone reform targets, may also find ways to be flexible if the troika finds Athens is broadly in compliance.

"With Greece, we cannot change the cornerstones of the aid package or tamper with the principle of conditionality. But I can imagine we could adapt certain things within that framework such as interest rates or maturities on credit, like we already did with the first package," said Norbert Barthle, an MP from Merkel's ruling centre-right coalition.

Jean-Claude Juncker, head of the Eurogroup of eurozone finance ministers, said Greece was staring at its "last chance" to avoid bankruptcy. A decision to grant more time would depend on the findings of the troika.

"As far as the immediate future is concerned the ball is in the Greek court," he said on a visit to Athens. "In fact this is the last chance and Greek citizens have to know this."

The tropical weather is getting interesting.

BBC data: