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Friday, August 31, 2012

Fed’s Bernanke Signals to Further Economy-Boosting Measures

U.S. Federal Reserve Chairman Ben Bernanke made the case today in Jackson Hole for a third round of so-called “quantitative easing,” the kind of unprecedented bond-buying the central bank has done in recent years to inject cash into the economy. Bernanke’s principal concern is that this period of high unemployment will be prolonged, causing “enormous suffering and waste of human talent,” as well as “structural damage on our economy that could last for many years.” He also defended past actions by the Fed, explaining how communication and the $2.3 trillion in bond purchases helped spur growth and took pressure off the financial sector. His speech pleased the U.S. stock market, and the S&P500 ended August with the longest monthly gain since March.

Eurozone Unemployment at Record High, Inflation Accelerates

The jobless rate in the euro area reached 11.3 percent in July, the highest since the data started being compiled in 1995, the European Union’s statistics office said today. Even as European consumer confidence dropped to a three-year low in August, inflation accelerated to 2.6 percent in August, from 2.4 in July, driven by a 12.4 percent increase in crude oil prices. Sluggish growth and a worsening employment rate are good arguments for the European Central Bank to inject cash into the economy, a plan ECB President Mario Draghi has been pushing for. But printing and injecting money tends to boost inflation as well, something Germany’s top Central Banker Jens Weidmann has been very reluctant to do. With these inflation numbers, it may be even harder for Draghi to convince Germany to adhere to his proposals.

Brazil’s Growth Accelerates in 2Q on Investment-Boosting Measures

Brazil’s economy grew at the fastest pace in a year during the second quarter, a sign that some of the measures implemented by the government in hopes to boost investment have had an impact. Brazil’s economy slowed in the past year as demand for exports fell in Europe and China. Poor infrastructure and a shortage of skilled workers have also hindered the country’s economic expansion. To remedy this, Brazilian President Dilma Rousseff cut payroll taxes and set up policies to weaken the real. Rousseff announced on August 15 a new R$133 billion ($65.6 billion) stimulus package that would include privatizing roads and railways, and eventually airports, ports and waterways. Sixty percent of the package would be spent over the next five years, and the rest over 25 years. Yesterday, Brazil’s central bank cut interest rates to a record low of 7.5 percent, easing credit in the nation.

U.S. Department of Justice’s New Strategy Against Money-Laundering

The U.S. Department of Justice is preparing to bring criminal charges against banks and financial institutions that fail to implement internal compliance systems to monitor money-laundering. By bringing the focus on internal controls, the DOJ hopes to build cases not only against past misconduct, but also on ongoing money-laundering. Banks and other companies that deal with money are required to be proactive in preventing illicit conduct, in accordance with the the Bank Secrecy Act, but some haven’t yet created controls effective enough to do so. The DOJ isn’t shying away from indicting individuals responsible, also a first in the fight against fraud. Up until now, financial institutions have only gone far enough as to satisfy the requirements of banking regulators. With this new strategy, the DOJ effectively criminalizes the lack of fraud and money-laundering prevention within private companies.

New DNA Analysis Shows Early Humans Interbred with Lesser-Known Hominins

New evidence shows that early humans interbred with a lesser-known group of hominins called the Denisovans, a paper published in Nature reports. The Denisovans were closely related to the Neanderthals and probably had dark skin. The only traces of Denisovans ever found were a small bone fragment and two teeth in a cave in Siberia, enough to extract the DNA and map the genome. Scientists also said some Denisovan alleles were “consistent” with those that determine brown eyes and brown hair. The researchers also said Denisovans interbred with modern humans: traces of Denisovan DNA were found in the genome of contemporary Papuans, Australian aborigines, and people from southeast Asian islands. This could give us more clues about early human migrations across the globe.

Weekend Read: The Deadly Tin Inside Your iPad

The tin used to build smartphones and tablets comes in large part from very dangerous mines in Indonesia. Cam Simpson investigates. In Bloomberg Businessweek.

Editor’s note: we will not be publishing from the West Coast on Monday because it’s Labor Day in the United States. Please enjoy your weekend.

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