The U.S. jobless rate will stay high even when the country’s economy recovers from recession some time in the next few months, according to Federal Reserve Chairman Ben Bernanke. Speaking at a town hall meeting on July 26, Bernanke also said it would take GDP growth of around 2.5% to keep the jobless rate constant. The Fed’s current outlook don’t foresee growth to reach that level at any time during 2009.

Bernanke’s comments mark a shift in strategy to get his message to the U.S. population. In a departure from the central banker’s tradition as an aloof and secretive temple of economic policy, Bernanke has jumped into the public spotlight to an extent that none of his predecessors would have contemplated. He has given a television interviews, held televised news conferences, and written newspaper commentaries to explain the Fed’s efforts to fight the financial crisis.

Source: Reuters, New York Times

U.S. Government Takes 34% Stake in Citigroup

The U.S. government is set to take a one-third stake in struggling Citigroup following the completion of a long-awaited $58 billion share offering. The move will increase both the government’s exposure to and influence over the U.S. financial giant.

Source: Financial Times

Bank Lending Shrinks in Second Quarter

The total number of loans held by the 15 largest U.S. banks shrank by 2.8% in the second quarter of 2009. That comes after more than half of the loan volume in April and May came from refinancing mortgages and renewing credit to businesses, not new loans. Analysts reckon financial institutions are clamping down on lending to conserve capital as a cushion against mounting loan losses.

Source: Wall Street Journal

Julius Baer Profits Slump 47%

Swiss bank Julius Baer, which is splitting off its wealth unit, said on July 27 that its first-half profit dropped 47% due to as slumping markets and outflows of funds under management. Net income fell to $204.3 million, the Zurich-based bank said in a statement.

Source: Bloomberg

Growing Number of Consumers Stop Repaying Debt

A small, but increasingly noticeable group of cash-strapped consumers are deciding to stop paying off debts. After loading up on credit eagerly provided by the credit card companies during the boom times, people now find themselves trapped in an endless cycle where they are charged interest on interest and fees upon fees while the lenders get government bailouts.

Source: New York Times

Investors Flock to Corporate Bonds

Investor appetite for corporate bonds is on the rise. The investments are benefiting from the generally upbeat mood of the current earnings season on signs in quarterly reports that the U.S. economy is heading toward the end of the recession.

Source: Wall Street Journal

Apple Revamps iTunes

Apple is working with the four largest record labels to increase digital sales of albums. The plan involves bundling a new interactive booklet, sleeve notes, and other features with music downloads in an attempt to alter buying trends on the company’s online music store. The news comes as Apple is frantically finishing work on a full-featured, tablet-sized computer in time for the Christmas shopping season.

Source: Financial Times

U.S. and China Meet for High-Level Talks

Climate change, protectionism fears, and questions about how China navigates its rise as a global economic power will dominate the agenda on July 27 when the administration of U.S. President Barack Obama resumes a senior-level U.S.-China economic dialogue initiated in the Bush Administration. Few experts, though, expect any serious progress on the main issues separating the two economic giants.

Source: BusinessWeek

Chinese Cash in on French Wine

Chinese real estate investors based in Hong Kong and Beijing have paid top dollar for the French vineyard at Chateau Richelieu in southern France. The deal is the second purchase of a centuries-old French chateau in just over a year. The Chinese are spending millions of dollars to turn middle-of-the-road wines into best-sellers, while transforming the buildings into a destination for well-heeled Chinese wedding parties.

Source: Washington Post

Skilled Immigrants Start to Leave U.S.

A rising number of highly skilled immigrants are preparing to leave the U.S. as the nation’s economy slows. With the U.S. unemployment rate approaching double digits, job opportunities are diminishing and calls to restrict immigration have gotten louder. Those who favor tightening the rules argue that U.S. citizens should get first priority for jobs.

Source: BusinessWeek

High-Flying Kuwaiti Banker Commits Suicide

In a move that has sent shockwaves through the Gulf Arab financial community, a brash Kuwaiti financier facing a fraud suit by U.S. authorities was found dead on July 26 in an apparent suicide. A source said Hazem Al-Braikan appeared to have died from a single gunshot wound to the side of the head, while a policeman standing outside Braikan’s house said the well-connected financier had shot himself.

Source: Reuters