Thoughts From Joe - October 19, 2012October 19, 2012 Posted by: Joe Morgan, CFA
Britain takes another step away from the EU, with no objections from Germany. The budgets of the EU (which includes Britain) and the eurozone (which only includes members of the currency union) will be split, according to a proposal submitted by German Chancellor Angela Merkel. Britain does not want to find itself lending fiscal support to currency union members as those struggles continue. This is entirely rational and appropriate. Increasingly, the eurozone will find itself on its own with only the German economy attempting to support weaker members. The budgets of the EU (which includes Britain) and the eurozone (which only includes members of the currency union) will be split, according to a proposal submitted by German Chancellor Angela Merkel. Britain does not want to find itself lending fiscal support to currency union members as those struggles continue.
Housing starts reach their highest level in four years. The annualized pace of starts rose to 872,000 in September as building permits for future starts also rose significantly. According to the National Oceanic and Atmospheric Administration, September 2012 tied with 2005 as the warmest September on record. Even so, there's no denying a boomlet in the housing sector today.
The mix of workers to non-workers continues to move in the wrong direction. Since 2009, over 8 million people have been added to non-labor force rolls while just 800,000 have been added to the actual labor force. The lack of labor force participants drives down the unemployment rate measure. Though from a partisan source, the continued disruption in our workforce cannot be denied.
Spain would like to be bailed out without austerity restrictions. The union's new bailout mechanism includes requiring such restrictions in exchange for funds, but Spain is attempting to negotiate its own special deal. This is reminiscent of Greece, Portugal, and to a lesser extent, Ireland. At what point will Germans begin to feel the costs of eurozone exit do not meet the continued and growing costs of bailing out their neighbors?
September retail sales rose 1.1 percent after a 1.2...Read More