The Financial Landscape: Italy Under Stress; U.S. Social Safety Net In Danger

A roundup of news from around the world of finance:

The Boot Gets Kicked: As the eurozone sovereign debt crisis continues, focus is shifting to Italy -- the continent's third-largest economy -- as the next potential victim. "In what Italian media dubbed 'Black Friday,'" CNNMoney reports, "Italian stocks and bond yields plummeted at the end of last week, and trading was suspended for some Italian bank stocks following sharp sell-offs." The chaos resumed on Monday, "amid fears that those banks won't be able to pass eurozone stress tests -- the results of which will be published Friday."

Bloomberg reports that Consob, Italy's market regulator, took emergency action against short selling after Black Friday, when "the country's benchmark stock index fell the most in almost five months and bonds tumbled on investor concern the nation may be the next crisis victim." Eurozone fears were expected to hobble U.S. stocks on Monday, but Bloomberg points to a potential silver lining for Americans -- "The best currency forecasters say the dollar's 13 percent slide over the past year is coming to an end as Europe's deepening debt crisis discourages bets against the world's reserve currency."

Bye-Bye, Billions in Benefits:
Citing Moody's (MCO), The New York Times reports that nearly 20% of personal income in the U.S. derives from government benefits -- unemployment, food stamps, Social Security and disability -- and that, "by the end of this year ... many of those dollars are going to disappear, with the expiration of extended benefits intended to help people cope with the lingering effects of the recession." In all, Moody's estimates that the drying-up of certain benefits will cost U.S. consumers $37 billion this year. The problem, of course, is that this money -- which tends to be spent immediately on goods and services -- is vital to the health of the faltering recovery: According a Labor Department study, "every $1 paid in jobless benefits generated as much as $2 in the economy." On the other hand, the Times quotes a director at the Michigan Chamber of Commerce and an economist at the Cato Institute as arguing against any additional extensions of unemployment benefits, which they claim place counterproductive tax burdens on businesses and discourage the jobless from looking for work.

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Let's say my punk neighbor stands in my driveway holding a gun on my payday every other Friday afternoon to forcibly confiscate 20% of my paycheck. Then one day his mother discovers his thuggish behavior and forbids his theivering. When he discontinues stealing 20% of my paycheck, did those "dollars disappear"?

July 12 2011 at 1:01 PM Report abuse rate up rate down Reply

Hi everyone! I got so tired of clicking on the link "Latest Financial News", and looking at stories that have been there over a month. Their top story has been there since January! And the stories that are actually current, you cant comment on them! I moved over to Yahoo. There pages are much, much better. You actually get current news, and you can even comment! What a novel idea!

July 12 2011 at 6:46 AM Report abuse rate up rate down Reply

Just to let anyone know who has ears to hear with. The entire Futures market is a scam, it doesn't really "trade", rather it's controlled by a supercomputer. Another words the direction is controlled by a computer and not by the dynamics of "buying" and "selling". This is a 100% positive FACT, and my Advanced Videos PROVE this FACT beyond any shadow of any doubt whatsoever! If any of you want to learn the truth, come over to my website "Oil Trading Academy"

July 11 2011 at 10:41 PM Report abuse rate up rate down Reply

our great country is sinking faster that can be imagined, and our rich poiticians, who are above it all, are not plugging the holes and debating lofty ideas on the poop deck (I'm an old Navy officer, and loved the poop deck discussions) .

we're doomed, what a stupid situation . but the uber wealthy will do great, as in germany, japan, russia and uganda

July 11 2011 at 2:54 PM Report abuse rate up rate down Reply

we need to show them we have power, DON'T BUY ANYTHING ON THE 10TH OF EVERY MONTH


July 11 2011 at 12:48 PM Report abuse rate up rate down Reply

I'll say it again! Time to restart the WPA! Work needs to be done and plenty of people are out of work and physically able to do it! Why pay unemployment to have people stand around when you can pay the same money for productive work?

July 11 2011 at 12:00 PM Report abuse +1 rate up rate down Reply

"every $1 paid in jobless benefits generated as much as $2 in the economy." Now that is what I call a miracle!
This proves that "figures don't lie but liars figure!

July 11 2011 at 11:56 AM Report abuse rate up rate down Reply
1 reply to diddysmif's comment

It's actually basic economic theory. When the guy who gets the dollar spends it, he buys something from someone else. Assuming that THAT guy makes a profit on the sale he has incremental income, at least some of which he incrementall spends; he also replenishes his inventory by buying from someone else who makes an incremental profit, etc. ; and the guy that HE buys from ... etc., etc., etc.

July 11 2011 at 12:05 PM Report abuse -1 rate up rate down Reply
1 reply to itacurubi's comment

Spoken like a true trickle down disciple!

July 12 2011 at 12:48 PM Report abuse rate up rate down

that's right,don't mention Gold,the only real currency! Whatever you do,don't mention it! people might buy it to save they're earning power,and then where would we be!! you putz!!

July 11 2011 at 11:32 AM Report abuse +1 rate up rate down Reply