Greek and Italian prime ministers resign.The sovereign debt crisis in Europe became more confused as an unprecedented event occurred. The heads of two major national governments resigned within days of one another — Italian Prime Minister Silvio Berlusconi and Greece’s Prime Minister George Papandreou. Neither has been replaced as the restructuring or support of the finances of each nation has become more vital. Italy’s sovereign paper now yields almost 7%. Eurozone leaders believe that Greece’s economy could contract by as much as 5% this year. Bank experts predict that the write-offs of Greek debt will become write-offs of Italian or Spanish debt as these nations seek better terms for loans they have taken in the past.
President agrees to more offshore drilling. The Obama administration said it would open more offshore locations to deepwater drilling. The president’s argument is that the U.S. cannot be less dependent on foreign oil if it cannot explore for oil here. Secretary of the Interior Ken Salazar announced the Proposed Outer Continental Shelf (OCS) Oil and Gas Leasing Program for 2012 – 2017. The program makes more than 75% of undiscovered technically recoverable oil and gas resources estimated in federal offshore areas available for exploration and development. There will be resistance from some environmentalists, but concerns about that have been overwhelmed, in Obama’s estimation, by the chance that the U.S. could face oil prices above $100 for the next several years, and perhaps longer.
Adobe layoffs. The divide between the technology “haves” and “have nots” was demonstrated again as Adobe (NASDAQ: ADBE), the distributor of the Flash multimedia software found on nearly every PC in the world, laid off 750 people. Adobe has not had much success as it has tried to move its Flash software onto mobile devices. Apple (NASDAQ: AAPL) has blocked this progress as much as it can. Apple’s mobile devices use the competing HTML5. Apple’s near ubiquity in the mobile content delivery system has taken another victim.
IMF concerns with euro regions’s financial risk. Christine Lagarde, the head of the IMF, made more comments about the euro region’s financial risks. So far, based on the progress of Greece and Italy, her statements fall on deaf ears. She said, “Our sense is that if we do not act boldly and if we do not act together, the economy around the world runs the risk of downward spiral of uncertainty, financial instability and potential collapse of global demand … we could run the risk of what some commentators are already calling the lost decade.” The advice has gone unheeded for months.
Douglas A. McIntyre