Moderate Cheer about Europe – for the Moment

The latest idea to stave off Europe's woes is the creation of a permanent European Stability Mechanism. U.S. purchasing and supply managers have reason to be optimistic. And Nevada and California are pooling resources to investigate robo-signing shenanigans.

December 7, 2011
By Dees Stribling, Contributing Editor

Ahead of the major euro-zone pow-wow on Friday, word is that the latest idea to fend off Europe’s woes is the sooner creation of the European Stability Mechanism, or the ESM, which would be a permanent successor to the European Financial Stability Facility, or the EFSF, the temporary fund that has been bailing out various nations lately. The ESM is scheduled to be operational by mid-2013, but in these panicky times no one wants to wait that long, and euro-zone leaders are calling for a 2012 start-date.

The ESM-creating treaty has been signed, but not ratified in the cumbersome way that the euro-zone has for ratifying treaties, so it isn’t clear if a sooner start-date is possible. But even before ratification, change is in the wind for the permanent rescue fund. As originally envisioned, the limit for bailouts from ESM and the EFSF combined would be 500 billion euros ($775 billion). The EFSF has already used about 190 billion euros to tamp down fires in Greece, Ireland and Portugal. So the thinking of euro-panjandrums is that the 500-billion euro limit needs to be revised upward, or dispensed with all together.

Investors seemed optimistic about the direction the euro-zone was taking on Tuesday, with European and Asia stocks rising, and the currency itself up a little. And, if nothing else is consistent about this crisis, investors are bound to stay optimistic until something else comes along and sets off a mini-panic.

ISM Semi-Annual Report Shows Some Optimism About 2012

The nation’s purchasing and supply managers are optimistic themselves, or at least somewhat optimistic, in the latest Semiannual Economic Forecast by the Institute for Supply Management, which was released on Tuesday. While the forecast projects optimism overall about the U.S. economy for 2012, some sectors are naturally more cheerful than others. Still, 69 percent of survey respondents expected their own revenues to be greater in 2012 than in 2011.

The manufacturing sector is the most positive about prospects in 2012. Respondents in 17 industries said they’re expecting to do better next year than this. The non-manufacturing sector, on the other hand, appears slightly less positive about the year ahead, with only 15 industries expecting higher revenues.

Yet problems lie ahead. Survey respondents in manufacturing reported that the most difficult problems facing their businesses as they plan for 2012 are poor sales (43.9 percent); government regulations (22 percent); inflation (17.4 percent); cost of labor (4.5 percent); quality of labor (4.5 percent); taxes (4.5 percent); and interest rates and finance (3 percent).

California, Nevada Pool Resources in Robo-Signing Investigation

The attorneys general of California and Nevada said on Tuesday that the two states are joining forces to investigate foreclosure fraud and other mortgage shenanigans. That means sharing litigation strategies and evidence in both criminal and civil cases.

The states’ move is yet another indication that a settlement of the legal Gordian knot inspired by robo-signing and other dubious lender practices will not be a quick cutting of the knot by the federal government — the states want a say in how the issue is resolved. The move came not long after Massachusetts said it was planning lawsuits against the nation’s five largest mortgage servicers, and California AG Kamala Harris is already investigating Bank of America (and with it, Countrywide Financial), along with Citibank.

Wall Street gyrated on Tuesday, ultimately turning in a mixed performance. The Dow Jones Industrial Average gained 52.3 points, or 0.43 percent, while the S&P 500 gained 0.11 percent. The Nasdaq lost 0.23 percent.