MacroScope

Greek bond rebound masks stark economic reality

Ten-year Greek government bond yields tumbled to their lowest in nearly three years one day after Fitch upgraded the country’s sovereign credit ratings.

Borrowing costs fell to 8.21 percent – the lowest since June 2010, just after Greece received a bailout from the International Monetary Fund and European Union. The difference between 10- and 30-year yields was also at its least negative since that time.

The move comes after Fitch Ratings raised Greece to B-minus from CCC citing a rebalancing of the economy and progress in eliminating its fiscal and current account deficits that have reduced the risk of a euro zone exit.

The fall in borrowing costs suggests investors are pricing out that possibility, as well as the prospect of another debt restructuring, analysts say.

But the move has also coincided with a broad fall in euro zone borrowing costs in April fuelled by abundant central bank cash in the financial system. Thin liquidity in a debt market that was restructured in March 2012 also likely exaggerated the fall, say traders.

More Americans find aging is a gateway to poverty

Over the last several years, more Americans have found that aging has left them in the clutch of poverty. Between 2005 and 2009, the rate of poverty among American seniors rose as they aged, as did the number of people entering poverty, according to a new report from the nonpartisan Employee Benefit Research Institute (EBRI).

Poverty rates fell in the first half of the last decade for almost all age groups of older Americans (defined as age 50 or older) but increased since 2005 for every age group. Says Sudipto Banerjee, EBRI research associate and author of the report:

As people age, personal savings and pension account balances are depleted, and as people age, their medical expenditures tend to increase.

Growth not enough to ease inequality: Oxfam

Rising income inequality in rich nations has cast doubt on the old adage, often upheld by the economics profession, that a rising tide lifts all boats. A new report from Oxfam reinforces the notion that wealth does not trickle down of its own accord. The anti-poverty advocacy group says sometimes actively redistributive policies may be needed to address huge income gaps. It also says that, contrary to conventional economic thinking, such policies will directly contribute to better growth rather than impede it.

Inequality, often viewed as an inevitable result of economic progress, in fact acts as a brake on growth. Among the best ways to assure inclusive, sustainable growth and fight poverty, finds the study, are policies that reduce inequality. […]

Inequality erodes the social fabric, and severely limits individuals’opportunities to escape poverty. Where income inequality is high or growing, the evidence is clear that economic growth has significantly less impact on poverty: a trickle-down approach does not work.

Martin Luther King’s vampire squid: poverty

The devastating U.S. recession of 2008-2009 has highlighted the problems of income inequality and poverty in the world’s richest nation. In 2010, the last year for which data is available, the number of U.S. poor hit a record 46 million. As the country celebrates the Martin Luther King Jr. Day holiday, a look back at the civil rights’ leaders remarks on the subject are enlightening – if only for their continue relevance nearly half a century later:

(One) evil which plagues the modern world is that of poverty. Like a monstrous octopus, it projects its nagging, prehensile tentacles in lands and villages all over the world. Almost two-thirds of the peoples of the world go to bed hungry at night. They are undernourished, ill-housed, and shabbily clad. Many of them have no houses or beds to sleep in. Their only beds are the sidewalks of the cities and the dusty roads of the villages. Most of these poverty-stricken children of God have never seen a physician or a dentist. This problem of poverty is not only seen in the class division between the highly developed industrial nations and the so-called underdeveloped nations; it is seen in the great economic gaps within the rich nations themselves.

Take my own country for example. We have developed the greatest system of production that history has ever known. We have become the richest nation in the world. Our national gross product this year will reach the astounding figure of almost 650 billion dollars. Yet, at least one-fifth of our fellow citizens – some ten million families, comprising about forty million individuals – are bound to a miserable culture of poverty. In a sense the poverty of the poor in America is more frustrating than the poverty of Africa and Asia. The misery of the poor in Africa and Asia is shared misery, a fact of life for the vast majority; they are all poor together as a result of years of exploitation and underdevelopment. In sad contrast, the poor in America know that they live in the richest nation in the world, and that even though they are perishing on a lonely island of poverty they are surrounded by a vast ocean of material prosperity. Glistening towers of glass and steel easily seen from their slum dwellings spring up almost overnight. Jet liners speed over their ghettoes at 600 miles an hour; satellites streak through outer space and reveal details of the moon.

America’s poverty trap tightens its grip

U.S. poverty is becoming increasingly concentrated both geographically and racially, according to a new study from the Federal Reserve Bank of Cleveland. The authors find that while the poverty rate has moved up and down in a relatively narrow range over the last 40 years, mostly mirroring the ups and downs of the economy, that a deeper look at the data reveals some disturbing trends.

The data we have examined indicate that the share of Americans living in high-poverty neighborhoods increased between 1970 and 2000. And we have found that an individual’s poverty status or race is highly predictive of the neighborhood poverty rate they will experience.

The findings also suggest blacks and Hispanics have been disproportionately affected. The concentration is likely to further limit opportunities for escaping poverty, the authors say:

from MuniLand:

The forgotten American homeless

CBS's 60 Minutes showed a heartbreaking story last night that described several homeless families with children in Florida. The segment, entitled "Hard Times Generation: Families living in cars" (embedded above), detailed families living at the absolute edge of economic survival as they slept in their cars, in hotel rooms and with neighbors. In a deflating economy with few available jobs, they are the invisible underbelly. Big kudos to 60 Minutes for bringing their plight to our attention.

In 1933, a freshly inaugurated Franklin D. Roosevelt addressed a paralyzed nation with the following words:

More important, a host of unemployed citizens face the grim problem of existence, and an equally great number toil with little return. Only a foolish optimist can deny the dark realities of the moment.

Protesters converge to press anti-poverty message

Police threaded through a growing throng of demonstrators gathering in a downtown Toronto Park on Friday to demand G20 countries do more to fight global poverty and protect woman’s gender rights.

As the number of protesters grew under Canada’s trademark leafy maple trees, pro bono lawyers announced their phone numbers and told protesters to write them down on their hands or arms.

“If you get arrested, call us before you talk to police,” they told the crowd as nervous young women scribbled on their forearms.

Oxfam to G8: Act now on global poverty, maternal health

He has starred in such blockbuster films as Pirates of the Caribbean, as well as the upcoming Harry Potter and the Deathly Hallows, but actor Bill Nighy’s heart is set on his real life role as an ambassador for Oxfam.

Flanked by representatives from poor and developing nations from Africa and South America, Nighy was in Toronto on Thursday to ask global leaders gathering for the G8/G20 meetings this week to keep the promises they made a decade ago to reduce maternal mortality rates by 75 percent before 2015.

Nighy was fresh off the plane from Kenya, where he saw children competing with dogs to find scraps of food in garbage dumps. In some cases small girls are forced to sell their bodies for sex to dump kingpins who control areas with the best pickings, an emotional Nighy told reporters.

from FaithWorld:

U.S. Catholic CEO responds to Benedict’s economic encyclical

charity-in-truthPope Benedict's encyclical "Charity in Truth" proposed a sweeping reform of the world economic system from one based on the profit motive to one based on solidarity and concern for the common good. Like other such documents in the Roman Catholic Church's social teaching tradition, the encyclical delivers a strong critique of unbridled capitalism. This can be uncomfortable for Catholics who champion free enterprise and some conservative Catholic writers reacted quickly and critically. One of them, George Weigel, wrote the encyclical "resembles a duck-billed platypus." (Image: Charity in Truth/Ignatius Press)

We wanted to hear the views of a Catholic executive, one who's involved in business rather than reacting from the sidelines. So I called Frank Keating, president and chief executive officer of the American Council of Life Insurers (ACLI). The former Republican governor of Oklahoma (1995-2003) is a former chairman of the National Catholic Review Board, which he said "sought to identify and correct the horror of sexual abuse on the part of the clergy." He is a Knight of Malta and a Knight of the Holy Sepulchre.

DB: What's your overall reaction to the encyclical?

keatingFK:"I haven't read the 30,000 words but I think what the pope is proposing is not inconsistent with other papal messages. The common denominator to all of them is the worth of the individual, the dignity of every human person. So Benedict XVI focuses on the right to life, he speaks against euthanasia, he speaks against the evil of abortion, he speaks against cloning. But at the same time he talks about duties and responsibilities to the vulnerable because the vulnerable are dignified human beings as well as those who are rich and powerful.