Consumer confidence around the World is waning. Let´s review a few countries :

Bloomberg reports U.S. Consumer Sentiment Fell More Than Forecast in March

The Thomson Reuters/University of Michigan final index of consumer sentiment decreased to 67.5, the lowest level since November 2009, from 77.5 in February, the group said today. The median forecast of 67 economists surveyed by Bloomberg News projected a reading of 68.

Gasoline prices hovering near the highest levels since October 2008 are straining the finances of American households, whose spending makes up about 70 percent of the world’s largest economy. While unemployment has fallen for three months, Japan’s earthquake crisis led to a plunge in stock values, at one point wiping out all of 2011’s gains.

The decline in sentiment was foreshadowed by other gauges. The Bloomberg Consumer Comfort Index dropped last week to the lowest level since August as consumers’ assessment of the economy dimmed. The confidence gauge, which tends to inversely track fuel prices, slid to minus 48.9 in the week to March 20 from the prior week’s minus 48.5.

The current conditions gauge, which reflects Americans’ perceptions of their financial situation and whether they consider it a good time to buy big-ticket items like cars, decreased to 82.5 from 86.9 the prior month.

Future Expectations Gauge Plunges

ZeroHedge has a nice chart of Consumer Confidence “Expectations”

The Expectations component had its fifth largest drop in history, plunging from 72 to 58. This is a lower reading than that recorded when the “recession”, according to the NBER at least, was still raging. As a reminder the recession ended with “expectations” at 70.

Consumer Expectations Index at 57.9

South Korean Consumer Confidence Drops to 23-Month Low

Please consider South Korean Consumer Confidence Drops to 23-Month Low After Japan Quake

South Korean consumer confidence fell to the lowest level in almost two years, damped by Japan’s strongest earthquake and political unrest in the Middle East. Retailers’ stocks dropped in Seoul trading.

The sentiment index declined to 98 in March from 105 in February, the fourth monthly drop, the Bank of Korea said in an e-mailed statement in Seoul today. A number below 100 indicates pessimists outnumber optimists.

“Consumer confidence worsened so sharply, boding ill for private consumption and also economic growth,” said Park Sang Hyun, chief economist at HI Investment & Securities Co. in Seoul. “If oil prices stay above $100 a barrel for another month, sentiment will deteriorate further, prompting the central bank to pause interest-rate increases next month.”

The Bank of Korea raised rates for the second time this year on March 10 after inflation exceeded its target ceiling for two consecutive months. The benchmark seven-day repurchase rate now stands at 3 percent. Consumer prices climbed 4.5 percent last month.

U.K. Consumer Confidence at Record Low

U.K. Consumer Confidence at Record Low on Economic Worries

U.K. consumer confidence fell to a record low in February as Britons grew more pessimistic about the sustainability of the economic recovery and the outlook for jobs, Nationwide Building Society said.

An index of sentiment dropped 10 points to 38, the lowest since records began in 2004, the customer-owned lender said in an e-mailed report today. A measure of whether now is a good time to spend dropped 18 points to 52, also the lowest since the survey began.

The U.K. economy shrank in the fourth quarter, while inflation has soared to twice the Bank of England’s 2 percent target. Bank of England policy makers have split four ways as they debate whether to focus on boosting the recovery or curbing price pressures, and voted on March 10 to keep the benchmark interest rate at a record low of 0.5 percent.

“The labor market remains fragile” and “inflation is showing few signs of easing,” Gardner said. Oil prices have risen 37 percent in the last six months and U.K. unemployment rose by 27,000 in the three months through January to 2.53 million, the highest since 1994.

A gauge of consumers’ future expectations fell 14 points to 50 and an index of their view of the present situation slipped 3 points to 20, the lowest in 18 months, the report showed.

“High inflation has led many to expect interest rate rises by the summer, which may in turn have fanned concerns about mounting pressure on household budgets,” Gardner said. He sees rates on hold “until the back end of 2011.”

EU Consumer Confidence drops to -10.6

FXStreet reports EU Consumer Confidence drops to -10.6 in March

The EU consumer confidence index worsened slightly to -10.6 in March, compared to the revised -10.0 it recorded the month prior and the -11.0 which was expected.

French Consumer Confidence at 8-Month Low

Bloomberg reports French Consumer Confidence Declines on Higher Energy Prices

French consumer confidence fell to an eight-month low in March as surging energy costs sapped spending power and President Nicolas Sarkozy readied a new wealth tax.

An index of sentiment fell to 83 from 85 in February, national statistics office Insee said today in an e-mailed statement. That was the lowest reading since July.

With oil prices up more than 40 percent in a year, French motorists are paying more for gasoline while the government is planning electricity-price increases for later this year. That’s slashing spending power at a time when joblessness remains stuck near a seven-year high.

Sarkozy’s government is preparing an overhaul of a tax on the nation’s wealthiest households and the anti-immigration National Front is surging in opinion polls.

Gold just hit a new all time high and Silver just passed $38

Bloomberg reports Portuguese Parliament Rejects Government’s Deficit Plan

Portuguese lawmakers rejected Prime Minister Jose Socrates’s deficit-cutting plan, threatening to topple his government and increasing the chance of an international bailout.

Following parliament’s vote against proposed spending reductions and tax increases, Socrates was set to meet President Anibal Cavaco Silva at the presidential palace in Lisbon and then address the nation, heightening speculation he’ll call early elections.

The Social Democrats, the biggest opposition group in parliament, contested the new austerity measures. The party has still said it supports Portugal’s plan to reduce its budget gap and meet deficit targets.

“With bond yields stubbornly high and heavy debt redemptions due over the next few months, it appears all but inevitable that Portugal will be forced to follow Greece and Ireland in accepting financial support,” economists Emilie Gay, Roger Bootle and Jonathan Loynes of Capital Economics Ltd. wrote in a note yesterday.

Courtesy of Charles Hugh Smith from Of Two Minds

Is the Recovery “Self-Sustaining”? Here’s a Test

Here’s a simple test of whether the economic recovery is self-sustaining or not: cut Federal spending back to 2007 levels (a $1 trillion reduction) and cancel all Fed intervention such as quantitative easing.

Federal Reserve Chairman Ben Bernanke has suggested the economic recovery is almost “self-sustaining,” meaning it is no longer totally dependent on Federal stimulus and unprecedented Fed intervention for its “growth.”

The key idea here is simple: all the extraordinary stimulus spending, all the bailouts and all Fed programs–buying up $1 trillion in questionable mortgages, $600 billion in quantititative easing purchases of Treasury bonds, and so on–was all necessary to “get the economy through this rough patch.” At some magical point we are now approaching (or so we are reassured), the private (non-government) economy will start growing organically, meaning that non-State economic activity will generate a virtuous cycle of economic growth that fuels future growth.

The alternative vision is a bit more bleak. In this view, all the Federal Government and Fed spending and intervention have accomplished is encourage the culture of “extend and pretend” and “free money,” and raised the vulnerability of the Status Quo to exceptionally dangerous heights.

In other words, from this height, there can be no “soft landing” when the asset bubbles and stupendous Federal borrowing both collapse.

Here’s a simple test of whether the economic recovery is self-sustaining or not: cut Federal spending back to 2007 levels (a $1 trillion reduction) and cancel all Fed intervention such as quantitative easing. If the economy is self-sustaining, it will move forward without Federal spending and Fed intervention.

If “self-sustaining” is a fiction, an illusion, a mere figment of propaganda deployed to enable the Status Quo to feast off the remaining productive elements of the U.S. economy, then the economy will absolutely crater.

Let’s compare Federal spending in 2004, 2007 and 2010. Remarkably, the Federal government spends $1 trillion more a year now than it did a mere three years ago and $1.5 trillion more than it did a brief six years ago. Here are the numbers from the Office of Management and Budget website::

revenues

2004 $1.88 trillion
2007 $2.56 trillion
2010 $2.16 trillion

spending

2004 $2.29 trillion
2007 $2.72 trillion
2010 $3.72 trillion

deficit

2004 –$412 billion
2007 –$160 billion
2010 –$1.3 trillion

In three years, Federal spending jumped almost exactly $1 trillion, or 36.7%.

Here are the deficits of the past three years, and the estimated shortfalls for fiscal years 2011 and 2012:

2008: $458 billion
2009: $1.4 trillion
2010: $1.3 trillion
2011: $1.5 trillion (est.)
2012: $1.6 trillion (est.)

(CBO estimate for 2011)

total: $6.258 trillion in five years.

And this isn’t even the real total being added to the national debt, as “supplemental appropriations” for war costs and other large expenditures are “off budget” and not included in the “official” Federal deficit. The same is also true of funds appropriated to bail out mortgage giants Freddie Mac and Fannie Mae and other financial institutions.

Gross debt increased by $1 trillion fiscal year 2008, $1.9 trillion in 2009 and $1.7 trillion in 2010–considerably higher than the “official” deficit numbers. Debt held by the Public—which includes Treasury bonds owned by the central banks of China, Japan and other countries–jumped up 80% from $5 trillion in 2007 to $9 trillion in 2010.

Meanwhile, the U.S. economy has been treading water. In adjusted-for-inflation dollars, the U.S. Gross Domestic Product (GDP) in 2010 was almost precisely the same as it was in 2007: $13.363 trillion in 2007 and $13.382 trillion in 2010.

So the Federal government will have spent over $6 trillion–almost 41% of the nation’s annual GDP–just to keep GDP stagnant. That $1 trillion a year in extra spending is 7% of the GDP, which implies that if the Federal budget returned to the carefree, free-money days of 2007, the GDP would contract by 7%.

And that’s not even counting the trillions of dollars injected into the financial system by the Federal Reserve’s opaque machinations and money-printing schemes.

So what is America getting for this extra $1+ trillion in Federal spending a year? Just more of the same old Status Quo that did such an outstanding job circa 2008-2010. I have rooted around a conflicting mess of reports on Federal spending, and found precious little of that $1 trillion actually flows to those suffering from the recession.

Consider the direct costs of the Great Recession: extended unemployment costs, and food stamps (now called SNAP, Supplemental Nutrition Assistance Program).

In 2007, SNAP cost around $30 billion. In 2010, costs rose to $68 billion as the number of people receiving SNAP benefits rose by 15.6 million people, or 57% to 43.2 million in October 2010. So costs rose $38 billion in those three years.

The estimated cost of continuing unemployment extensions is estimated at $65 billion. According to this New York Times graphic, total unemployment program costs in 2010 were $158 billion. So together, these two recession-related programs cost about $100 billion more a year.

Let’s factor in inflation from 2007 to 2010: according to the Bureau of Labor Statistics (BLS), that accounts for 5% of any change. So $50 billion of that $1 trillion a year can be attributed to inflation.

The $787 billion stimulus package passed by Congress in 2009, the American Recovery and Reinvestment Act of 2009, is being spent over several years: $154 billion in 2009, $353 billion in 2010, $232 billion in 2011 and the remainder over 2012 and beyond.

Roughly speaking, that averages to about $250 billion for each of the recession-impacted years, but it doesn’t affect the 2012 Federal spending plan much.

So where is the $1 trillion a year being spent? Around $350 billion a year can be attributed to recession-caused spending: extended unemployment, SNAP and the stimulus package.

That still leaves $650 billion unaccounted for in 2011, and more in the 2012 budget, which is not influenced by the little remaining stimulus spending. So in effect, the sum in 2012 is more on the order of $850 billion, as the stimulus funding drops to around $50 billion.

Next, let’s look at the four big Federal programs:

Medicaid:
2007: $276 billion
2010: $293 billion (+17 billion)

Medicare:
2007: $395 billion
2010: $462 billion (+67 billion)

Social Security:
2007: $586 billion
2010: $724 billion (+138 billion)

Defense:
2007: $699 billion
2010: $738 billion (+39 billion)

(other sources list other totals, depending on what is included in “Defense.” I leave the Department of Energy and Veterans Affairs as separate departments, but if you prefer to include them, you’ll find the total budget appropriations for both of those departments increased by only a few billion.)

So these entitlement and Defense programs account for about $260 billion of the additional $1 trillion in spending. Add in the $100 billion in direct costs of recession and you get at most $360 billion. Add in inflation and you get to $410 billion.

So only $600 billion more each and every year is spent to prop up a voracious Status Quo. From various sources, here are the estimates for the Federal budget in fiscal 2011:

revenues (taxes): $2.3 trillion
(if the economy doesn’t implode and the creek don’t rise)

spending: $3.8 trillion

deficit–borrowed: $1.5 trillion

That $1.5 trillion is roughly 11% of GDP. The Fed has printed over $2 trillion to prop up the mortgage and Treasury markets, seeking to “extend and pretend” the valuations of defaulted assets held on the books, to suppress interest rates and last but certainly not least, to inject hundreds of billions of dollars in free money to goose the risk trade, i.e. stocks and commodities.

The Fed sees a “self-sustaining” economy as one which “only” needs $1 trillion in extra Federal spending and another $1 trillion in Federal Reserve goosing every year just to maintain the same GDP we had in 2007.

I suggest an addict analogy is more accurate: a high-cost, bloated, corrupt and inefficient cartel-State Empire of high-cost, bloated, corrupt and inefficient fiefdoms is like a heroin-addled junkie. The “high” of GDP “growth” keeps requiring ever-larger hits of smack; any slackening in this accelerating consumption of Marching Powder will send the addict careening into the agony of withdrawal.

So what we really have is a Status Quo that now needs $2 trillion or more in “free money” injected into its fiefdoms and Elites just to keep from crashing. It would laughable if it wasn’t so tragic: here is Ben Bernanke, shoving the needle of QE2 into the twitching half-dead addict and declaring that the zombied-out junkie is on the threshold of “self-sustaining” something or other.

The only cure for addiction is cold turkey. By all means let’s keep the methadone and nicotine patch of food stamps flowing, but the Status Quo–the fiefdoms and Financial Elites–will have to go cold turkey.

What does that mean? It’s simple: you get the same bloated budget you enjoyed in 2007: $2.7 trillion is still a lot of money. But it is $1.1 trillion less than the $3.8 trillion 2011 Federal budget. Even at $2.7 trillion, we’d be running a staggeringly large deficit of $400 billion.

“Self-sustaining growth” ranks right up there with “we had to destroy the village to save it” as a classic of propaganda gone sour.

COURTESY OF TYLER DURDEN

The vote by the UN Security Council to impose a no-fly zone on Libya and take “all necessary measures” to protect Libyan civilians from government-led attacks, has passed with a vote of 10 to 5. The vote “will also allow military intervention to enforce the ban, and calls to take “all necessary measures” to protect civilians and civilian populated areas under threat of attack.” The UN Security Council Resolution was backed by 10 countries, enough to pass, while 5 other countries – including Russia, China and Germany – chose to abstain. None voted against. Next up: CNN’s ratings go through the roof as everyone picks up where they left off in the Gulf War with watching 1st person perspectives of bombing sorties taking out various Libyan targets. German planes however will be missing: Merkel’s state refuses to participate at all in the bombing.

Below, Al Jazeera live footage of Benghazi rejoicing:

From BBC:

British forces could be in action over Libya as early as Friday, if a UN resolution is agreed, a senior government source has told the BBC.

BBC political editor Nick Robinson said the source stressed talks were continuing and it could take longer, but would be within days of a yes vote.

The UN Security Council is due to vote imminently on whether to authorise a no-fly zone in Libya.

Russia and China are expected to abstain, rather than use their veto.

The vote comes as Col Gaddafi warned people in rebel stronghold Benghazi his troops are coming “tonight” and there would be “no mercy” – he told rebels that those who laid down their weapons would be pardoned.

Senior UN sources said British and French war planes could be in the air within hours to carry out initial air raids on Libyan positions, if the resolution is passed, possibly with logistical support from Arab allies.

REUTERS :

Areas of Tokyo usually packed with office workers crammed into sushi restaurants and noodle shops were eerily quiet. Many schools were closed. Companies allowed workers to stay home. Long queues formed at airports.

As Japanese authorities struggled to avert disaster at an earthquake-battered nuclear complex 240 km (150 miles) to the north, parts of Tokyo resembled a ghost town.

Many stocked up on food and stayed indoors or simply left, transforming one of the world’s biggest and densely populated cities into a shell of its usual self.

“Look, it’s like Sunday — no cars in town,” said Kazushi Arisawa, a 62-year-old taxi driver as he waited for more than an hour outside an office tower where he usually finds customers within minutes. “I can’t make money today.”

Radiation in Tokyo has been negligible, briefly touching three times the normal rate Tuesday, smaller than a dental x-ray. Wednesday, winds over the Fukushima nuclear-power plant gusted out to sea, keeping levels close to normal.

But that does little to allay public anxiety about an ailing 40-year-old nuclear complex with three reactors in partial meltdown and a fourth with spent atomic fuel exposed to the atmosphere after last Friday’s earthquake and tsunami.

“Radiation moves faster than we do,” said Steven Swanson, a 43-year-old American who moved to Tokyo in December with his Japanese wife to help with her family business.

He is staying indoors but is tempted to leave. “It’s scary. It’s a triple threat with the earthquake, tsunami and the nuclear radiation leaks. It makes you wonder what’s next.”

A number of major events have been canceled, including the World Figure Skating Championships, Japan Fashion Week and the Tokyo International Anime Fair whose organizers cited “extreme circumstances.”

EMPTY RESTAURANTS, SHOPS

Some foreign bankers, flush with money, are fleeing fast, some on private jets. BNP Paribas, Standard Chartered and Morgan Stanley were among banks whose staff have left since Friday, according to industry sources.

Thousands of people have inundated private jet companies with requests for evacuation flights, sending prices surging.

“I got a request yesterday to fly 14 people from Tokyo to Hong Kong … they did not care about price,” said Jackie Wu, chief operations officer at Hong Kong Jet, a newly established private jet subsidiary of China’s HNA Group.

A chartered plane from Tokyo to Australia, one way, was $265,000, 20 percent higher than usual, he said.

Mike Walsh, chief of Asia Jet, said they had run three evacuation flights to Hong Kong from Tokyo by early Wednesday.

Electronics shops are selling out of small, portable Geiger counters that measure radiation. Strawberry Linux, a Tokyo-based company, is out of stock, said its owner, Masahiro Ochiai.

Some areas of Tokyo were hit by rolling blackouts and reduced train services as the nuclear plant’s operator, Tokyo Electric Power Co, struggled to make up for a drop in power capacity.

At Sony Corp’s headquarters in Tokyo’s Shinagawa district, only 120 staff of the usual 6,000 were working. Staff were told to stay at home as much as possible due to difficulties with train transportation, said Sony spokeswoman Mami Imada.

In Akasaka, normally packed with office workers, sushi restaurants and noodle shops, streets were quiet into the night when the area usually becomes a neon-lit entertainment district.

“Akasaka has been dead quiet since the quake. We should be thankful we are alive but if this continues, the economy will be a disaster,” said Akihiro Sumitani, owner of a shop that sells kitchen utensils.

“I seriously worry how many shops can survive.”

People stocked up food, milk and other supplies, emptying some shelves at convenience stores and supermarkets. Some residents towed suitcases. Thousands showed up at nearby airports without tickets, hoping to book flights out of Tokyo.

Anthony Blick, an expatriate in Tokyo working from home since the earthquake, said he would prefer to leave.

“I’m worried about the nuclear reactors in Fukushima. There’s a lot of information out there but unfortunately a lot of it is conflicting. Ideally, I would like to get out of Japan but that isn’t practical at the moment.”

Many schools were closed, but one mother interviewed outside an open kindergarten said she preferred her children in school.

“I want them to do everything that we are allowed to do as long as it is safe,” she said. “If I show them that I’m nervous, my children will get nervous.”

Courtesy of  Win Thin

“Moody’s cut Portugal by two notches to A3 and kept a negative outlook despite the recently announced fiscal tightening and despite the tentative plan to expand the EFSF. This downgrade really shouldn’t come as any surprise. As we wrote just last week, “Moody’s A1 and Fitch’s A+ ratings for Portugal need to be adjusted downward as our model rates it at A-/A3/A-, while S&P’s A- looks correct.”

The only thing we’d add is that it looks like Portugal will deteriorate further in the next quarterly update of our model (out later this month) to the BBB+/Baa1/BBB+ area, and so the negative outlook is justified and further cuts appear likely. Portugal clearly will remain in the market spotlight as its 10-year yield remained above 7% for the 28th straight day on Tuesday. Furthermore, Portugal’s 5-year yield stayed above 7% for the 19th straight day and the 2-year stands at around 6.3%.

This continues the pattern that we saw with Greece and Ireland. In both those cases, the 10-year yield was the first to break above 7%, with the 5-year and then the 2-year yields breaking above that level eventually. It is noteworthy is that the rescue packages for those two countries have done nothing to substantially lower their borrowing costs, with 10-year yields still substantially above 7% for both. With contagion showing no signs of abating, we think Portugal is doomed to the same fate.

What about Spain? Spain 10-year yields are the next highest in the periphery and are now around 5.2%. While one might be tempted to say that Spain has decoupled from the rest of the periphery, we note that Ireland 10-year yields were around 4.6% right after the Greece rescue package was announced, and that Portugal 10-year yields were just above 5.9% right after the Ireland rescue package was announced. If market sentiment on the periphery remains negative after the upcoming summit and likely Portugal bailout, then Spain yields may resume their upward creep. The timeline between rescues appears to have shortened, with close to 7 months between Greece and Ireland but likely down to around 4 months between Ireland and Portugal if current trends continue.”

REUTERS :

“The world’s third-largest economy, already saddled with public debt double the size of its $5 trillion output, must rebuild its infrastructure, including roads and rail to power and ports — in a scale not seen since World War Two.

Friday’s quake and tsunami has so far killed at least 10,000 people and struck a northeastern region which accounts for an estimated 6-8 percent of gross domestic product, compared with around 12.4 percent from the areas affected by the Kobe quake.

However, the loss of fixed assets and human capital from a quake which has also triggered hydrogen explosions at a nuclear power plant, looks to be far greater, at a time when oil is near a 2-1/2 year peak and other commodity prices remain elevated.

The economic damage is likely only to shave a sliver off global growth, and tens of billions of dollars in the reconstruction bill are likely to eventually help boost Japan’s economy and the Asian construction sector.

But analysts say past experience shows the cost may yet overshoot initial estimates.

“From the experiences, there is a tendency to underestimate,” said Brendan Brown, head of economic research at Mitsubishi UFJ Securities.

“There are many uncertainties — we don’t know how long power outages will last and that’s an ongoing cost, in addition to reconstruction. There is a loss of output from dislocation. If that goes on for two months, that may dwarf the cost of reconstruction.”

Rough estimates show that replacing a nuclear power plant alone may cost $5 billion. Desperate to avert a nuclear meltdown, Japan was forced to sacrifice three of its reactors by pumping seawater to cool reactor cores.

Insured losses from Japan’s earthquake could be as high as $35 billion, even without tsunami and nuclear related losses.”

It is amazing how analysts are not taking in consideration the  consequences for the Global Economy !!!

Greek 10-Year Bonds

Irish 10-Year Bonds

Portuguese 10-Year Bonds

Spanish 10-Year Bonds

As we can see, not much improvement so far !!!

Courtesy of Marc Chandler

“The market continues to digest the meaning and implications of Moody’s decision to cut Spain’s rating to Aa2 from Aa1. The two main considerations behind Moody’s decision is that the cost to restructure the banks will be greater than Spanish officials have estimated and the sustainability of current austerity measures.

At 40-50 bln euros, Moody’s new estimate is more than twice the estimate it had made late last year and is well above the government’s estimate. Moody’s downgrade of FROB, which is the government arm that is to help raise the funds for the bank restructuring. The ECB was quick to point out that FROB has the capacity to provide as much as 90 bln euro in funding. What was not said was that like the EFSF, FROB is not pre-financed. That as banks request funds, it needs to raise them by issuing bonds and will then in some ways compete with the government in the capital market.

Ambitious fiscal targets are being met, but Moody’s concerns are two-fold. First that the measures tend to rely on cuts in capital spending and wage freezes, both of which by definition are not sustainable. Second, Spanish regional governments enjoy a high degree of autonomy and fiscal discipline has been more elusive. A little than half the 17 autonomous regions overshot their fiscal targets last year.

To be sure, Moody’s continues to suggest that Spain will not have to tap into the EFSF. Just like Irish per capita GDP remains above Germany, Spain’s debt/GDP ratio last year was lower than Germany (and France and the UK) and if Moody’s figures are close to the reality, Spain will still have a lower debt/GDP than Germany this year.

Later today Spain’s central bank is expected to provide a more detailed accounting of the bank/cajas recap needs.”