Euro zone agrees to create single supervisory body
Euro zone leaders agreed on Friday to take emergency action to bring down Italy and Spain’s borrowing costs and to create a single supervisory body for the euro zone banks by the end of 2012. Reuters reports that in a midnight summit the leaders agreed that euro area rescue funds could be used to stabilize bond markets without forcing countries to adopt extra austerity measures. They also agreed that the European Stability Mechanism could be used to recapitalize banks without the country increasing its budget deficit. Countries will have to sign a memorandum of understanding in the future and set out their policy commitments but they will not be subject to the intrusive oversight of the “troika”. The troika is the group of lenders from the European Union, the International Monetary Fund and the European Central Bank. European and Asian markets are both rallying on Friday. The Dow closed down 24 points on Thursday, ending at 12,602.
Supreme Court upholds Obamacare
By one vote, the Supreme Court upheld Obamacare characterizing it as a “tax” and therefore allowed to be enforced by the federal government under the US Constitution. According to the Financial Times, stocks in health insurance companies fell on Thursday while hospital stocks rose. The Supreme Court indicated that its role was to determine whether a policy was legal, not whether the policy was good or bad.
SEC may force Nasdaq to upgrade systems
The SEC is investigating what caused the mishaps that plagued the Nasdaq Stock Market during Facebook’s debut on May 18 and the effects on brokers and investors who lost money. According to the Wall Street Journal, the SEC may issue a regulatory rebuke and ask Nasdaq to revamp its processes for developing, changing, testing and implementing computer code used in public offerings and similar exchange functions. This will be embarrassing for Nasdaq whose reputation is based on its technological expertise. This reputation has helped it to attract many of the Silicon Valley companies. Nasdaq is scheduled to submit a plan to the SEC next week regarding how it will compensate brokers and investors for a three hour wait for confirmations on the day of the Facebook IPO along with a half hour delay in trading.
Goldman Sachs slashes jobs
CNBC is reporting that Goldman Sachs cut several dozen jobs on Thursday primarily in its headquarters in lower Manhattan. Employees in New Jersey and Salt Lake City were also eliminated. Goldman, which employed 32,400 at the end of March, also cut dozens of jobs earlier this month. The cuts are primarily due to slowdowns in its capital markets group.
More drilling to be allowed in Arctic and Gulf
Just in time for the election, the Obama administration has agreed to allow 15 potential lease sales in the Arctic and in the Gulf of Mexico, according to USAToday. While environmentalists are opposed, the Department of Energy believes that safety issues have been addressed. Earlier this week, Energy Secretary Salazar noted that Shell may be approved to begin drilling off the North Slope of Alaska soon. Additionally, permits were approved for Trans Canada to build 115 miles of new pipeline from Cushing, Oklahoma to refineries on the Gulf Coast.
China’s Milk industry remains unsafe
This week a Chinese company named Bright Dairy admitted that it mistakenly flushed alkaline water used for cleaning into cartons of milk. It recalled some 300 cartons after consumers complained about the smell. According to the Associated Press, milk is a relatively new addition to the Chinese diet and regulation remains limited. Four years ago, six babies died from contaminated milk.
Lifeguard shortage increases risk at many pools and beaches
Despite the alleged shortage of summer jobs for teens, many communities are facing a shortage of life guards this summer, according to USAToday. A drowning death at a Minnesota lake was blamed directly on the lack of available lifeguards. Apparently, the $350 certification to become a lifeguard is deemed too expensive for many teens. Pools and beaches in Minneapolis, Tulsa, North Carolina and Pennsylvania have all been forced to close due to the shortage.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.