U.S. economy grew faster in fourth quarter 2011

The U.S. economy growth in fourth quarter 2011 was stronger than originally thought as consumers increased their spending and businesses stocked up their inventories.

Gross domestic product (GDP), the broadest measure of the nation's economy, grew at a 3% annual rate in the last quarter of 2011, the Commerce Department reported Wednesday. The government had initially reported the economy grew at a 2.8% rate, and economists had projected the GDP growth would be revised down to 2.7% from the initial reading.

That's the fastest growth since the second quarter of 2010 and a major improvement from a 1.8% growth rate in the prior quarter.

Consumer spending picked up at an annual rate of 2.1% in the fourth quarter, slightly higher than originally reported. Spending on durable goods, especially motor vehicles, helped drive GDP higher, as did increased spending at restaurants and hotels.

Meanwhile, businesses increased their inventories by $54.3 billion, after cutting back on their stock the prior two quarters.

Rising European Debts

The debts of the European Union (E.U.) countries have been rising to dangerously high in the past decade causing the current Europe's debt crisis. Greece and Italy have had high levels of debt since 2000, according to Smartinmoney.com. Now more than a half of the E.U. countries carry debts exceed the European Commission limit, which is 60 percent of gross domestic product (GDP).

Greece’s debt problems are not new. The country had high debt as percentage of GDP, even as it prepared to join the euro zone in 2000. Italy and Belgium have long wrestled too with large debt loads. The debt-to-GDP ratios of Greece and Italy have been dangerously high, which are 109% and 103% respectively, since 2000.

Greece In Default

~ Smartmoney.com ~ Ratings agency Standard & Poor's (S&P's) cut Greece's long-term credit rating on Monday to selective default from already junk-level CC category. It is a result of debt write-off deal with private creditors that is part of a second EU bailout of the country.

The rating firm says their move was triggered by the terms Greece put in the tentative deal agreed last Tuesday, which amounts to a 53.5 percent write-down. Following the February 21 debt deal, Greece amends its sovereign bond documentation with collective action clauses (CACs). Greece has been seeking to avoid an outright default on its massive debt by negotiating a "voluntary" debt exchange with creditors.

A CAC binds all bondholders of a certain series to amended payment terms in the event that a certain quorum of creditors has agreed to the terms, S&P explained. If a large majority of creditors accept the new terms then all the creditors need to agree, which would have consequences for bondholders.

Congress passes economic stimulus of payroll tax cut

A $143 billion economic package to extend the payroll tax holiday and unemployment benefits

Large bipartisan coalitions in both the House and Senate passed a $143 billion economic package that includes a year-long extension of the payroll tax holiday for 160 million workers, just as Obama had requested more than five months ago, and also extends unemployment benefits for millions of others.

On a 293 to 132 vote on Friday, February 17, the House supported a compromise plan to keep giving workers a small amount of extra cash with each paycheck while also providing a continued cushion for the unemployed, and the Senate followed shortly afterward with a 60 to 36 vote to approve the plan. It now goes to Obama for his signature, giving him a victory on a portion of the massive jobs bill he presented to Congress last fall.

Facebook takes typical IPO route for its stock market debut

Facebook Inc. is in a quiet period after it filed paperwork on Feb. 1 with the U.S. Securities and Exchange Commission (SEC) to raise $5 billion in an initial public offering (IPO). Federal rules limit what company executives can say in public after companies file form S-1 to register their securities with the (SEC).

The social networking site is just beginning a months-long effort that involves appeasing regulators, wooing investors, and dealing with endless amounts of paperwork before starting its stock market debut. Facebook will follow a familiar IPO pattern, according to SmartInMoney.

Going public using a typical IPO route, Facebook is likely will go through the following course of actions. (Read more detail “Facebook IPO Process Roadmap” at SmartInMoney.com)

• Facebook’s S-1 filing goes the Division of Corporation Finance and the desks of a lawyer and an accountant who specialize in the industry. These staffers will go through the document page by page review. They bring their recommendations to a more senior lawyer and accountant who complete the SEC’s first comment letter.

Blue-Chip Dow at 3-Year High

U.S. blue-chip index, Dow Jones Industrial Average (DJIA), broke through to its highest close since May 2008, back before the Lehman Brothers Holdings Inc. collapse, as investors increasingly put aside fears of economic calamity and focused again on fundamentals.

Reports of a three-year low in unemployment and other positive developments Friday pushed the Dow ahead 156.82 points, or 1.23%, to 12862.23. The DJIA index still have to rise 10% to reach its record close of 14164.53, hit Oct. 9, 2007.

The blue-chip index’ surge is a sign of the extent to which investors have put aside the global fears that gripped them last summer. Then, the Dow fell almost 20%, which would have marked a new bear market.

Facebook’s IPO: Numbers & Charts

The social media giant Facebook is finally opening its doors to public investors. In the most enthusiastically awaited stock market flotation for years, Facebook eventually began the process of its initial public offering (IPO). Facebook, the world’s largest social-networking site, is in quest of raising $5 billion in the IPO. That is about half the amount that analysts had speculated, but the figure could rise.

On February 1st the social network announced plans for an initial public offering (IPO) which would give it an estimated market capitalization between $75 billion and $100 billion - similar to that of fast-food chain McDonald’s. A $100 billion price tag would hardly be cheap, but other tech giants are worth more: Google’s market capitalization is $190 billion, Microsoft’s $250 billion and Apple’s $425 billion.