Germany Calls for Greater Austerity Measures in the Eurozone

Germany has led the way for austerity measures in the Eurozone since Greece requested bailout in May 2010. Their measures do not differ much from the political debates in most countries and call for decreases in spending and benefits as well as an increase in taxes and greater enforcement of tax evasion.

Germany will likely continue to push for increased austerity in the Eurozone and specifically for Greece, Ireland, and Portugal as these measures have already been factored into the aid agreements for these three countries.

New York Times, April 15, 2011

Resentment Is Rising In Euro Zone

Budget Deficit Plan and the Federal Borrowing Limit

President Obama laid out a budget plan that would cut federal deficits by $4 trillion over four years. In his speech, budget cuts that would pave the way for an increase in the federal borrowing limit were also announced. The federal borrowing limit will be a focus of debates over the next few months as the U.S. is expected to reach its limit by May 16. A decision on the ceiling is expected by June and maneuvers could be used to delay defaults until July.

Wall Street Journal, April 14, 2011
Obama Stokes Deficit Fight

REITs Remain Marketable

Nine new REITs have been developed for the market this year. These developed securities show that demand still remains for packaged mortgage securities depsite the credit and liquidity failures that were caused by sub-prime mortgages in 2008.

Wall Street Journal, April 13, 2011
Mortgage REITs on a Tear As High Yields Fuel Demand

Europe and the U.S.

The U.S. is not facing the same inflation pressures as Europe. Commodity prices are on the watch list but Janet Yellen calls the Fed's current bond-buying program the "appropriate" solution for the U.S. 

Wall Street Journal, April 12, 2011
Fed Plays Down Inflation
Inflation Concerns Weigh on Treasurys

Dollar Weakens

The dollar weakened against it's basket of currencies last week following the US government's affliction over budget cuts and a looming resolution needed on the federal borrowing limit.

The Federal Reserve's quantitative easing and the decision on the federal borrowing limit are likely to direct the movement of the US dollar over the next few months.

Wall Street Journal, April, 11, 2011
Dollar Still in a Downdraft

Government Borrowing Limits

Done with the $38 billion budget cut, next on the government’s agenda will be increasing the federal borrowing limit. Money owed to Social Security comprises the majority of the federal debt, which ended September 2010 at $13.5 trillion. As the government is on track to exceed the current limit of $14.25 trillion by mid-May, debt will either have to be restructured or the federal debt limit increased.

Increasing the federal debt limit would call for another round of budget cuts which is not going to be easy as hurdles to the debt-limit increase are likely to be the same as in the $38 billion budget cut and include the Democrats demand for Planned Parenthood funding and John Boehner and the Republicans stance on health care, the environment, and abortion rights.

Gene Sperling has been the lead administrator for the government’s strategy on the debt-limit debate. A debate which will be battling through Congress this month and has the potential to be a “recovery-ending event,” as quoted by Ben Bernanke in Calme’s New York Times article.

New York Times, April 10, 2011
Next on Agenda for Washington: Fight Over Debt

Government Shutdown is Averted

Political opposition showed in Congress as the government passed an eleventh hour bill that would cut $38 billion from the federal budget for the remaining months of this year. In his first month in the position, Speaker of the House, John Boehner was unrelenting in his Republican stance on the need to decrease funding to Planned Parenthood programs. However, in the last leg of the discussion, President Obama overruled in the debate and funding to family planning programs remained unchanged as the Democratic Party remained loyal to their support for the programs.

New York Times, April 9, 2011
Budget Deal to Cut $38 Billion Averts Shutdown