On Tuesday officials briefly closed a fifteen mile stretch of the Mississippi River near Natchez, Mississippi due to flooding. The River is straining the levees and may soon overcome them flooding hospitals, businesses and historical mansions if it surpasses 57.2 or 57.3 feet. The River is expected to crest at 57.5. Barges on the Mississippi carry coal, timber, iron, steel and more than half of the U.S. grain exports and slow downs cost hundreds of millions daily to the U.S. economy. Although the boats were allowed to navigate the River, they were forced to go very slowly and one at a time to ease the pressure on the levees. The slow-down at Natchez caused corn, wheat and soybeans to increase on the commodities markets. The Associated Press also indicated that 10 freight trains were suspended costing $20,000 to $40,000 daily. Approximately 4800 people have been displaced with an estimated 6000 people to ultimately be forced from their homes.
Faulty U.S. vents may have increased nuclear crisis in Japan
Japanese officials indicate that vents manufactured in the U.S. and currently used in U.S. power plants failed to work in one of the nuclear power plants damaged by the earthquake in March, according to the New York Times. The vents allegedly failed to open properly causing a fireball to form, and ultimately an explosion inside the plant. The incident causes concern for U.S. plants using the same venting systems.
Swipe fee rules continue to be debated
A recent scandal at the Michael's chain of craft stores has increased the debate between banks and credit unions and the government seeking to implement Dodd-Frank rules. Eighty stores in twenty states had client's debit card numbers swiped. When a compromise occurs, the banks are generally liable to replace the fund. The industry indicates that the cost of losses, as reported in the Wall Street Journal, is $1.4 billion annually. This compares to industry swipe fee revenues of $15.7 billion annually. The new rule would limit swipe fees to 12 cents per transaction. Today fees average 44 cents per transaction.
Stress tests proposed for U.S. banks
The Financial Times reports that the Federal Reserve is proposing that U.S. banks undergo stress tests similar to those required in Europe. If banks fail the stress tests, the Fed would be allowed to veto any dividend payouts from the banks. The EU currently conducts stress tests on more than 90 European banks.
New Hong Kong commodities exchange
A new commodities exchange opened in Hong Kong on Wednesday, hoping to compete with the exchanges in China, New York and London. The Associated Press indicates that 1 futures contract for gold was exchanged. Ultimately the exchange hopes to trade metals, agricultural products, energy and commodities. The exchange may ultimately be denominated in the yuan as opposed to the U.S. dollar.
EU recovery "not bad at all"
The EU President, Herman Van Rumpuy said on Wednesday that the recovery for the European Union is "not bad at all", according to the Associated Press. While growth rates are anticipated to be at 1.8 percent this year and 2.0 in 2012, Rumpuy indicated that this is not bad for mature economies. China's growth rate is projected at 10%.
Wall Street analysts predicts economic fallout from pension obligations
Meredith Whitney, the Wall Street analyst that has caused numerous uproars, is releasing a report indicating that failure of states to fund pension obligations will lead to serious challenges for the U.S. economy. Whitney indicates that states owe $1800 billion in debt and $1300 billion is related to pension and other retirement obligations. This will cause public services to decline. She predicts that wealthy individuals in states with the greatest challenges, including California, Illinois, Ohio and New Jersey will emigrate to states with lower taxes and better public services.
Troubled Australian banks
Moody's downgraded the top 4 Australian banks on Wednesday due to their reliance on global wholesale lending, according to the Wall Street Journal. The banks, who all recently reported bumper earnings, were downgraded from Aa1, the highest rating, to Aa2. Critics indicate the downgrades should have happened more than a year ago and that the banks are already in recovery.