China’s Foreign Exchange Reserves Surge, Exceeding $2 Trillion
July 15 (Bloomberg) -- China’s foreign-exchange reserves, the world’s biggest, topped $2 trillion for the first time as the nation’s economic recovery prompted overseas investors to pump money into stocks and property.
The reserves rose a record $178 billion in the second quarter to $2.132 trillion, the People’s Bank of China said today on its Web site. That dwarfs a $7.7 billion gain in the previous three months.
The Shanghai Composite Index, the world’s second-best performer, surged 75 percent this year as Premier Wen Jiabao’s stimulus package triggered unprecedented lending and surging investment. The increase in the reserves means China may buy more U.S. Treasuries as the Obama administration expands debt sales to fund a plan to revive growth.
“Hot money is flowing back,” said Sherman Chan, an economist with Moody’s Economy.com in Sydney. “China has the strongest prospects out of all major economies.”
M2, the broadest measure of money supply, rose a record 28.5 percent in June from a year earlier, the central bank said.
The yuan traded at 6.8316 against the dollar as of 4:47 p.m. in Shanghai, from 6.8329 yesterday.
The central bank has used bill sales to push up money- market rates for three weeks, seeking to tighten monetary policy without choking off a recovery as the surge in money supply increases the risk of asset bubbles, bad loans and resurgent inflation. China’s reserves are double those of Japan, the country with the second-biggest foreign currency holdings.
‘Great Challenges’
“The pace of foreign-exchange inflows will accelerate in coming months as China’s recovery attracts investors, and that will pose great challenges for monetary policy,” said Lu Zhengwei, an economist at Industrial Bank Co. in Shanghai.
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Wednesday, July 15, 2009
Tuesday, July 14, 2009
The Economy Is Even Worse Than You Think
By MORTIMER ZUCKERMAN
The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
Here are 10 reasons we are in even more trouble than the 9.5% unemployment rate indicates:
[Commentary] David Klein
- June's total assumed 185,000 people at work who probably were not. The government could not identify them; it made an assumption about trends. But many of the mythical jobs are in industries that have absolutely no job creation, e.g., finance. When the official numbers are adjusted over the next several months, June will look worse.
- More companies are asking employees to take unpaid leave. These people don't count on the unemployment roll.
Read Full Story :
The recent unemployment numbers have undermined confidence that we might be nearing the bottom of the recession. What we can see on the surface is disconcerting enough, but the inside numbers are just as bad.
The Bureau of Labor Statistics preliminary estimate for job losses for June is 467,000, which means 7.2 million people have lost their jobs since the start of the recession. The cumulative job losses over the last six months have been greater than for any other half year period since World War II, including the military demobilization after the war. The job losses are also now equal to the net job gains over the previous nine years, making this the only recession since the Great Depression to wipe out all job growth from the previous expansion.
Here are 10 reasons we are in even more trouble than the 9.5% unemployment rate indicates:
[Commentary] David Klein
- June's total assumed 185,000 people at work who probably were not. The government could not identify them; it made an assumption about trends. But many of the mythical jobs are in industries that have absolutely no job creation, e.g., finance. When the official numbers are adjusted over the next several months, June will look worse.
- More companies are asking employees to take unpaid leave. These people don't count on the unemployment roll.
Read Full Story :
U.S. Budget Gap Exceeds $1 Trillion for Fiscal Year
By Vincent Del Giudice
July 13 (Bloomberg) -- The U.S. budget deficit topped $1 trillion for the first nine months of the fiscal year and broke a monthly record for June as the recession subtracted from revenue and the government spent to rejuvenate the economy.
The shortfall for the fiscal year that began Oct. 1 totaled $1.1 trillion, the first time that the gap for the period surpassed $1 trillion, Treasury figures showed today in Washington. The excess of spending over revenue for June was $94.3 billion, the first deficit for that month since 1991, according to data compiled by Bloomberg.
Individual and corporate tax receipts are sliding even as the worst recession in five decades shows signs of easing because the jobless rate continues to rise -- reaching a 26-year high in June -- and companies have yet to see a sustained increase in demand. The shortfall is also widening as the government ramps up spending from the $787 billion stimulus program President Barack Obama signed into law in February.
“This is a difficult pill to have to swallow,” said Richard Yamarone, director of economic research at Argus Research Corp. in New York. “The economy and banking system need these funds to recover, yet it will ultimately hit Americans’ wallets hard. It’s a necessary evil.”
Treasuries Drop
Treasuries fell to their lows of the day after the figures, with yields on benchmark 10-year notes rising to 3.35 percent at 3:29 p.m. in New York from 3.30 percent late yesterday.
Economists surveyed by Bloomberg News forecast a June deficit of $97 billion, according to the median of 30 estimates. Projections ranged from deficits of $109.3 billion to $70 billion.
The June deficit compares with a surplus of $33.5 billion in the same month a year earlier. Spending last month surged 37 percent to $309.7 billion and revenue fell 17 percent to $215.4 billion, the Treasury said.
The Congressional Budget Office estimates the federal budget shortfall for the first nine months of the fiscal year was also $1.1 trillion, while saying the budget deficit for June was $97 billion. For the fiscal year that ends Sept. 30, the Office of Management and Budget forecasts the deficit to reach a record $1.841 trillion, more than four times the previous fiscal year’s $459 billion shortfall.
For the fiscal year to date, the interest expense on the government’s outstanding debt was $320.7 billion, according to Treasury data released July 7. Total public debt outstanding exceeds $11.5 trillion, according to the Treasury’s July 9 statement on the government’s cash balance.
Tax Receipts
Corporate tax receipts totaled $101.9 billion through June versus $236.5 billion, a decline of 57 percent, the Treasury’s budget statement said today. Individual income tax collections were down 22 percent so far this fiscal year to $685.5 billion compared with $877.8 billion in the year-earlier period.
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