Economic Update

Bloomberg:
Dollar May Surpass ‘Established Lows,’ Goldman Says
Aug. 27 (Bloomberg) -- The dollar may weaken through “established lows” as signs of a global economic recovery drive gains in equities and oil, Goldman Sachs Group Inc. said.

“That kind of shift could easily be prompted by continued good news from the macro front and the persistently negative dollar-equity and dollar-oil correlations,” Thomas Stolper, an economist at Goldman Sachs in London, wrote in a report yesterday. “Dollar bulls could well end up disappointed. Even a short-term move beyond our three- and six-month forecasts of $1.45 per euro is getting increasingly likely.”Read the full story here

Associated Press:

Bank insurance fund down 20 percent in 2Q

WASHINGTON (AP) -- The agency that guarantees bank deposits said Thursday there are no immediate plans to borrow money from the government to bolster its insurance fund, which has shrunk under the weight of collapsing banks.

The fund fell 20 percent to $10.4 billion in the second quarter as U.S. banks overall lost $3.7 billion, the Federal Deposit Insurance Corp. said. That's the fund's lowest point since 1992 at the height of the savings-and-loan crisis. Some analysts have warned that the fund could fall below zero by year's end. read the full story here

San Francisco Chronicle:

Bleak financial picture at UC Berkeley

Forced to cut $150 million from his campus budget this year, Chancellor Robert Birgeneau of UC Berkeley painted a grim picture of employee layoffs and pay cuts, fewer courses and likely fee increases as thousands of students returned to school on Wednesday.

"These are extraordinary times," Birgeneau said during his back-to-school remarks. "And for UC administration, these are less-than-inspiring times."

Funding from the state, he said, fails to cover about 9,000 of Berkeley's 35,000 students. Put another way, he said, state funding now covers about 25 percent of the school's budget, down from about 75 percent in earlier years.

"This is not a stable situation," he said.Read more here

Wall Street Journal:

As Budget Deficit Grows, So Do Doubts on Dollar

LONDON -- The U.S. economy may be showing signs of recovering from the financial crisis, but the jury is still out on the future of the U.S. dollar.

While many analysts expect the dollar to strengthen in coming months as the crisis fades and the U.S. economy turns toward growth, a growing chorus of investors is expressing concern about the longer-term outlook for the greenback. Read the full story here

Reuters:

'Cash for Refrigerators' Debuts in Fall. Really.

By Joe Walsh

Before heading home to face the anger at the now infamous health care "town halls," Congress rushed through an extension to what was then considered a popular program: Cash for Clunkers. Then, like much of the August break, Cash for Clunkers went sideways as critics picked apart the program's weaknesses, consumers stopped showing up with so many clunkers, and dealers started making noise about something as simple as when they might actually get the rebate money that the government promised.

So, what do you do when you have a poorly-conceived and ill-managed project winding down (Clunkers expires at 8 p.m. eastern on August 24)? Kick off another one, even more poorly thought out, and gloss it with an equally catchy name: Cash for Refrigerators. Beginning in the fall, consumers will have access - through existing state-level energy efficiency incentive programs - $300 million in stimulus funds made available as rebates for energy efficient appliances. Read the full story here