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 INTERNATIONAL ECONOMIES 
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Hat tip to guanosphere

Japan Exports Fall for Third Straight Month
Published: Wednesday, 21 Oct 2009 | 9:32 PM ET
By: Reuters

Japan's exports edged lower for the third consecutive month in September as a rising yen weighs on overseas shipments and as a rebound driven by global stimulus spending and the stocking of inventories starts to wane.

Shipments to China continued to improve, but economists doubt this will continue as the country is trying to prevent its fiscal stimulus from forming asset bubbles in its economy.

Exports to the United States, a vital market for Japanese goods, were also slow to recover, suggesting exports will make less of a contribution to Japan's growth in coming months.

"The yen's rise is hurting corporate revenues. While the global economy is picking up, the boost to exports from strength in China may start to fade," said Takeshi Minami, chief economist at Norinchukin Research Institute in Tokyo.

"What's needed now is for consumption to recover in the United States, which is the major market for high value-added Japanese goods. In that sense, it may take time for exports to stage a full-fledged expansion."

con.

http://www.cnbc.com//id/33423471

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Wed Oct 21, 2009 8:16 pm
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 Re: INTERNATIONAL ECONOMIES

Dubai's main investment fund seeks debt payment delay

Dubai skyline
Dubai World has fuelled the emirate's rapid economic growth of recent years

The government-owned investment company behind Dubai's rapid development drive has asked its creditors for a six-month delay on repaying its debts.

Dubai World, which has total debts of $59bn (£35bn), is asking creditors if it can postpone its forthcoming payments until May next year.

Dubai World has also appointed global accountancy group Deloitte to help with its financial restructuring.

The company has been hit hard by the global credit crunch and recession.

It was due to repay $3.5bn of its debts next month.

The malaise has also affected Dubai as a whole, where, following six years of rapid growth, the economy has slumped since the second half of 2008.

This has led to Dubai property prices falling sharply.

'Shocking'

The Dubai government said in a statement that the request to delay debt repayments also applied to property developer Nakheel, a Dubai World subsidiary.

"It's shocking because for the past few months the news coming out has given investors comfort that Dubai would most probably be able to meet its debt obligations," said analyst Shakeel Sarwar, of SICO Investment Bank.

Dubai is one of the seven self-governing emirates or states that make up the United Arab Emirates.

Analysts say the Dubai government has paid the price for a flamboyant economic model centred on foreign capital and giant construction projects.

Some have speculated it is likely to turn to the more economically conservative Abu Dhabi emirate to bail it out.

Global credit rating agency Standard & Poor's, which rules on a company's or government's ability to repay its debts, said the announcement "may be considered a [debt] default".

As a result, it said it was downgrading its ratings on several Dubai government-related financial entities.

The Dubai World announcement was made on the eve of the Eid al-Adha Muslim festival, which will see many government agencies and companies close in Dubai until 6 December.

http://news.bbc.co.uk/2/hi/business/8379816.stm

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Thu Nov 26, 2009 8:03 am
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 Re: INTERNATIONAL ECONOMIES
Hat tip to Phennommennonn at GLP

Rothschild appointed to help sell Dubai World assets !!

Paul Reynolds, head of Rothschild's advisory operations in the Middle East, was this week asked to work for the Dubai government's chief restructuring officer alongside Aidan Birkett of Deloitte, (Deloitte and Touche is a major NWO company - always at Bilderberg meetings) who was appointed on Wednesday.

The team is tasked with assessing the group's assets, which is likely to result in a large scale sell-off of assets as varied as the QE2 cruise liner; Turnberry, the golf course that hosted this year's Open Championship; and a raft of properties.

A spokesman for the Dubai department of finance confirmed that all options and asset sales would be considered, except for the DP World subsidiary that bought P&O, the British ports company. "I'm sure all of the assets of Dubai World will be reviewed," he said. "The QE2 is one of them. It's part of the restructuring process, though it's too early to say whether there's any sale in mind."

The neighbouring emirate of Abu Dhabi is seen as one of the main buyers of Dubai's assets. Last year when rumours about Dubai's debt problems first started, sources said Abu Dhabi had offered to buy Emirates but Dubai had so far refused to part with its flagship carrier.

Abu Dhabi is also said to be interested in Emaar, the property company that owns the Burj Dubai skyscraper, the Dubai Mall shopping centre, and Dubal, Dubai's aluminium company.

However, the assets in Dubai World are more likely to be sold first. The group's biggest problem area is thought to be Nakheel, its property arm that owns the Palms, the ambitious man-made islands. Nakheel also has two hotel chains, one of which owns the Turnberry Hotel.

Dubai World's venture capital arm, Istithmar, owns stakes in global assets including Barneys, the New York department store; Cirque du Soleil, the South African entrepreneur Sol Kerzner's hotel chain; and Standard Chartered bank. The company has also bought into MGM Mirage, the Las Vegas gambling operation – even though gambling is banned in Dubai – and Troon Golf.

London properties include Adelphi on the Strand and the Grand Buildings in Trafalgar Square.

Rothschild was one of five banks working in recent months to help Dubai World meet its debt obligations. Deutsche Bank was the other lead adviser and they were supported by Citibank, JP Morgan and the Dubai Islamic Bank. When the standstill decision was taken on Wednesday, all the banks were stood down as the mandate had changed.

Rothschild and Deloittes declined to comment.

http://www.dailymail.com/News/statenews ... uild=cache

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Sun Nov 29, 2009 10:41 am
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Post Re: INTERNATIONAL ECONOMIES
Dubai debt crisis: Now British banks face fresh crisis after investing billions

By Liz Hazelton
Last updated at 4:57 PM on 27th November 2009

* Barclays, RBS and HSBC face losing billions
* Wall Street plummets by 2 per cent after late opening
* FTSE falls by 1.5 per cent before stabilising
* Banks see £14billion wiped off market value in one day
* Dubai may consider selling QE2 to tackle debt

British banks were teetering on the brink of a fresh meltdown today after it emerged they had invested heavily in crisis-hit Dubai.

An $80billion debt default in the emirate has already reawakened the spectre of a global 'double dip' - that the first shoots of recovery could be wiped out by a second wave of recession.

But the level of exposure that the crippled British banking sector faces is now under renewed scrutiny.

The crisis was prompted by Dubai World, the development company behind three palm shaped islands as well as an off-shore replica of the globe , defaulting on its debt.

Today it emerged that:

* Royal Bank of Scotland (RBS) was Dubai World's biggest loan arranger since January 2007, according to JP
Morgan
* HSBC has an estimated £9.6billion in loans and advances to UAE customers
* Barclays has an exposure of around £3billion

The figures are particularly alarming as the sector has had to be bailed-out by the tax payer on a number of occasions over the last year-and-a-half

Earlier this month, RBS and Lloyds Banking group received another £50billion to keep them afloat

RBS - which has received the biggest state rescue anywhere in the world - is now effectively owned by the taxpayer.

As the money markets continued to falter, Gordon Brown moved to dispel investors' panic, claiming that he believed British banks were 'well-capitalised'.

Speaking at the Commonwealth summit in Trinidad, Mr Brown said: 'I think we will find this is not on the scale of the previous problems we have dealt with.'

Asked if the Dubai situation could spark a 'double-dip' recession, he said: 'You are obviously going to have setbacks with a bank here or an organisation there which has had problems, but I do believe the world has a better way of monitoring what is happening, so we can be sure that - despite setbacks - we will continue to go forward.'

Stock markets around the world have endured another turbulent 24 hours.

Wall Street plummeted 2 per cent when it opened at 2.30pm GMT this afternoon.

In London, the FTSE fell around 1.5 per cent first thing after a 3 per cent fall yesterday wiped almost £44 billion from blue-chip stocks.

The index recovered its poise to stand 0.5 per cent lower after the first hour of trading. It was at 5188.73 at 12.45pm, down from 5194.13 at start of trading this morning.

In Frankfurt, the Dax index fell 1.32 per cent to 5,540.34 while in France, the CAC lost 1 per cent to 3,639.66.

Asian markets were also under pressure overnight as Hong Kong's Hang Seng fell more than 5 per cent and Japan's Nikkei was 3 per cent lower.

Banks worldwide saw £14billion wiped off their market value yesterday.

Dubai's rulers have done their best to calm fears, claiming the situation was under control.

Sheikh Ahmed bin Saeed al Maktoum, the uncle of Dubai's ruler Sheikh Mohammed bin Rashid al Maktoum, said: ''Our intervention in Dubai World was carefully planned and reflects its specific financial position.

'The government is spearheading the restructuring of this commercial operation in the full knowledge of how the markets would react.

'We understand the concerns of the market and the creditors in particular.

'However, we have had to intervene because of the need to take decisive action to address its particular debt burden.'

There were reports today that the emirate may consider selling the QE2, bought for $100million in 2007, to tackle some of its debt.l

Much of the debt default falls on Dubai World, which owns property developer Nakhell.

As of August, the conglomerate had $59billion of liabilities which it now hopes to avoid redeeming for six months.

Analysts had expected that the Dubai's oil-rich neighbour Abu Dhabi would offer financial support.

But Dubai may have to abandon an economic model that focused on developing swathes of desert with foreign money and labour.

Even the prospect of an Abu-Dhabi-backed bailout did little to allay concerns among investors, already worried the global economy may not be recovering quickly enough to justify a near doubling of prices for emerging market stocks and many commodities since March.

Tokyo traders have already dubbed the development Financial Crisis Part II.

'The panic button's been hit again,' said Francis Lun, general manager of Fulbright Securities in Hong Kong.

'The biggest worry I have is whether this will trigger a repricing in the overall emerging market,' said Arthur Lau, a fund manager in Hong Kong with JF Asset Management.

'This an important reminder that the credit crisis is forgotten but not gone,' Robert Rennie, strategist at Westpac Global Markets Group, said in a note.

Asian banks, like their European peers, scrambled to distance themselves from Dubai, a desert emirate that emerged from dusty obscurity to invest in global lenders such as Standard Chartered and lure fund managers with the promise of a tax-free lifestyle.
Dubai

The nerves showed in credit markets, at the centre of the financial storm triggered by the Lehman Brothers' bankruptcy last year.

Asian credit default swaps, used to insure against default, were at their widest in a month, with the Asia ex-Japan iTraxx investment-grade index touching 124/129 basis points.

Dubai's credit default swaps were being quoted as high as 500-550 basis points, some traders said on Thursday.

Dubai's debt problems are a hangover from a property bubble that imploded after the financial crisis derailed its plans to become a magnet for tourists and a regional hub for everything from shipping to entertainment.

Banks' exposure to a Dubai default pales in comparison to the $2.8 trillion in writedowns the International Monetary Fund estimates U.S. and European lenders will have to make between 2007 and 2010 as a result of the credit crisis.

'Similar stories to the one in Dubai are likely to come out, leading risk money to pull out from assets such as commodities and stocks,' said Takahiko Murai, general manager of equities at Nozomi Securities in Japan.

Japan's biggest bank Mitsubishi UFJ Financial Group fell as Japan's Nikkei average struck a four-month closing low. It also came under pressure from weak exporters after the dollar hit a fresh 14-year low against the yen. The Australian and New Zealand dollars retreated.

Shares in HSBC Holdings, one of the bookrunners on an outstanding $5.5 billion Dubai World loan, dropped more than 7 per cent and Standard Chartered losses topped 6 per cent.

The London listed shares of the two lenders led the biggest tumble in European bank stocks in six months on Thursday.

Read more: http://www.dailymail.co.uk/news/article ... z0YHIFfHMG

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Sun Nov 29, 2009 11:31 am
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Post Re: INTERNATIONAL ECONOMIES
Is there a parallel between the downfall of Dubai World and the failure of Creditanstalt Bank of Austria in 1931?

excerpts:
Creditanstalt
From Wikipedia, the free encyclopedia

Founded 1855
Headquarters Vienna, Austria
Key people Baron Rothschild, founder

The Creditanstalt (CA) was an Austrian bank. The Creditanstalt was based in Vienna, founded 1855 ... by the Rothschild family. Being very successful it became the largest bank of Austria-Hungary. It declared bankruptcy on May 11, 1931, during the Great Depression but was rescued by the Oesterreichische Nationalbank and the Rothschilds and merged with the Wiener Bankverein, thus changing its name to Creditanstalt-Bankverein.

http://en.wikipedia.org/wiki/Creditanstalt
**************************
from J. Bradford DeLong's blog
Quote:
Time to Reread the History of Austria's Creditanstalt in 1931...

Interesting time. In Europe, the Creditanstalt's bankruptcy and what followed was what turned the recession into the European Great Depression...

http://delong.typepad.com/sdj/2009/11/t ... -1931.html
*************************

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"The world will not be destroyed by those who do evil, but by those who watch them without doing anything." ~ Albert Einstein


Sun Nov 29, 2009 11:47 am
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Post Re: INTERNATIONAL ECONOMIES
Dubai's threat to U.S. banks
Although there's little direct exposure to Dubai World's default risk, U.S. financial institutions could take major indirect hits.

By Les Christie, CNNMoney.com staff writer

Last Updated: November 27, 2009: 10:56 PM ET

NEW YORK (CNNMoney.com) -- The news that the sovereign wealth fund of Dubai requested a postponement of billions of dollars of debt this week could pose a big problem for U.S. banks.

The state-run investment company, Dubai World, owes about $60 billion. It rang up much of that in a building boom that included the world's tallest skyscraper and the Palm Islands in the Persian Gulf, settlements shaped like palm trees.

According to CMA DataVision, which tracks credit markets, there's a 35.82% probability that Dubai will default on that debt.

New York-based Citigroup (C, Fortune 500) has the most exposure to default risk at Dubai World, which a J.P. Morgan (JPM, Fortune 500) equity research note estimated at $1.9 billion. Citigroup declined to comment.

While other major banks in the United States are believed to have little direct exposure, the ripple effect could be more crippling, according to Richard Bove, a bank analyst with Rochdale Securities.

"There could be huge indirect exposure," he said. "One has to assume that U.S. banks will be hurt."

J.P. Morgan declined to comment, while Goldman Sachs (GS, Fortune 500) and Bank of America (BAC, Fortune 500) were unavailable for immediate comment. Morgan Stanley (MS, Fortune 500) said a Dubai World default "would have have no material impact on its earnings."

Bove said the underlying problem is that there is a lot of uncertainty floating around. For example, there's little information available about counterparty derivatives, guarantees that transfer default risk from lenders to other financial institutions. And it's unknown how much of Dubai World's debt guarantee is held by U.S. banks.

And while UK banks, such as Standard Chartered, HSBC (HBC), Royal Bank of Scotland (RBS) and Barclays (BCS) are much more exposed to Dubai World, with a total of more than $30 billion in default risk according to J.P. Morgan's note, U.S. banks have extensive dealings with UK institutions. Those include trading and guaranteeing debt, which could translate into losses for U.S. banks.

There's also U.S. banks' interactions with their German counterparts. Dubai has loaned a lot of money to Eastern European nations, as has Germany. Any losses from defaults there could expose U.S. banks to some risk.

Finally, there's the impact of already reeling commercial real estate markets worldwide.

"Dubai may have to unload some very prestigious properties at distressed prices, and this will drive the price of all commercial real estate lower," said Bove. "That would clearly be a problem for American banks."

Bove also posited that the problems at Dubai World could add weight to the growing sentiment that is already strong in the U.S. Congress about beefing up regulation.

"Congress is demanding that anyone connected to the U.S. financial system has to be regulated," he said.
Rattling bank stocks

Bank stocks are particularly vulnerable to a market turndown triggered by the Dubai crisis, said Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors. He said the run-up this year has led to an overvalued stock market.

"We had been looking for something to trigger a correction," he said. "This could be that catalyst."

It would add to a market already made volatile, especially with the approach of the end of the tax season for mutual funds, which has put a lot of money in motion. The impact could fall heaviest on the financial sector.

Sorrentino added that the risk of default will put a damper on all commercial credit markets. Institutions may have to set aside more reserve funds to cover default risk, leaving less cash to lend out, and, in general, take a more cautious underwriting approach.

If lending does decrease, that could cut into bank profits.
First Published: November 27, 2009: 12:11 PM ET

http://money.cnn.com/2009/11/27/news/co ... /index.htm

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Sun Nov 29, 2009 11:51 am
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Post Re: INTERNATIONAL ECONOMIES
FWIW -I'm not saying one has anything to do with the other, and I'm not saying it doesn't. I don't believe in coincidences.

he Tiger Woods Dubai (Arabic: ذي تايجر وودز دبيّ‎) is the only Tiger Woods-designed golf course and golf resort in the world. The planned golf course and resort is located at Dubailand, Dubai's largest tourism and leisure complex. The golf course and resort is a joint venture between Tiger Woods through his recently launched Tiger Woods Design and Tatweer, a member company of Dubai Holding.[1]

http://www.google.com/url?sa=t&source=w ... EibyqOjHkQ

*******************************

Woods and Dubai crash the same day

By Tom Ryan, Kansas City Star Reader Advisory Panel

In America economists stared at the sales numbers. In Florida, Tiger Woods is injured in a one car crash. And in Dubai news that Dubai World cannot pay on its $59 (some say up to 80) billion of loans. They may get a six month reprieve on interest payments. Woods is heavily invested in Dubai, at least in name.

The Tiger Woods Dubai Golf Course and Community is owned by Tatweer LLC part of a new conglomerate of oil production companies, not doing very well right now. How much money has Tiger lost in the desert? Are these crashes linked in any way? Lots of speculation out there, financially and about Tiger’s early morning mishap. Any link? A call from a broker? Are both Woods and Dubai too big to fail?

Hopefully an empty link but the links in Dubai remain quiet with plenty of available tee times.

http://voices.kansascity.com/node/6694

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Sun Nov 29, 2009 1:35 pm
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Post Re: INTERNATIONAL ECONOMIES
Hat tip to guanosphere

December 19, 2009
China's Desperate Homeowners


By Patrick Chovanec

I’ve come to learn that when something is banned in China, it’s probably well worth checking out. That’s proven to be the case with a new hit TV series called woju 蜗居, which goes by the English name “Dwelling Narrowness”. The series, which aired on Beijing and Shanghai TV, focuses on the difficulties facing average Chinese people in an environment of spiraling apartment prices and official corruption. One blog calls it “without question one of the most influential television series to have aired in China,” and it must have touched some raw nerves, because it was yanked from the airwaves and ordered back to the edit room to be “recensored.” If anything, its abrupt cancellation has generated even more interest among Chinese viewers, who can still download it illicitly online.

The main story revolves around the two Guo sisters, who live in Shanghai. The elder, Haiping, and her husband are graduates of Fudan University, and together live on a typical “local” combined salary of RMB 9,000 (US$1,300) per month. In order to scrimp and save every penny, they rent an cheap one-room apartment and live apart from their young daughter, who is being raised by Haiping’s parents. Frustrated by their earlier decision not to purchase an apartment when prices were far cheaper, they are obsessed with buying one as soon as possible, even though they can barely afford it. They end up buying a place with a mortage of RMB 6,000 per month, 2/3 their income.

The younger sister, Haizou, is a pretty and naive girl who lives with her kind and loyal boyfriend, Xiao Bei. She works for a somewhat slimey property developer who relies on her to help entertain important contacts, one of whom is Secretary Song, an official in the city government who passes along valuable advice and information. Song is facing a bit of a midlife crisis, and is attracted to Haizao’s youth and innocence. Pressed by her elder sister to provide some of the cash she needs to buy an apartment, Haizao grows closer to Secretary Song, eventually becoming his mistress.

An interesting side story concerns one of Haiping’s neighbors, who actually own their tiny apartment in an old part of town that has been condemned for redevelopment. Unwilling to accept the meager compensation they are offered by local officials, they refuse to move, even as the authorities shut off their power and water to drive them out. This subplot is based on a number of real-life incidents that have taken place in China, most notably a family in Chongqing that refused to vacate their home even though the authorities bulldozed the entire neighborhood around them.

So far I’ve only watched up to Episode 19 out of 35, so I can’t spoil the ending even if I wanted to. But I do highly recommend it for anyone who wants to gain an insight into the social tensions and economic challenges facing China today (unfortunately I have not yet found a version that has English subtitles, but if I do I will post a link). One of the things I really like is how none of the characters are outright villains or heroes. They all have a believable mix of attractive and not-so-attractive traits, which makes them feel like people you might actually know. All of them act from credibly human motives and find themselves in situations that definitely ring true to me in many ways.

In watching the show, there have been a few moments in particular that caught my attention and struck me as especially revealing:


Quote:
* The older sister, Haiping, considers several older (and more affordable) apartments, but is convinced that if the owner is selling, there must be something wrong with them. Ultimately, she decides to buy a brand new apartment — a thought process that sheds some interesting light on why China’s real estate sector is so heavily lopsided in favor of new developments and has such a weak secondary market.
* There’s a classic scene where a developer first opens the doors to pre-selling units in a project that has not yet been built, is still just a model. A crowd of buyers rush in, willing to pay any price, and all the apartmetns are sold out in a matter of minutes — an image that perfectly captures the “gold rush” atmosphere of China’s current property market.
* After returning home from the pre-sale session, an astounded Haiping asks her husband how apartments can be so unaffordable yet there still seems to be unlimited demand to buy them. I’ve wondered the same thing myself. What she doesn’t even mention is how most of these apartments will remain unoccupied long after they have been completed.
* Later, Haiping complains to a coworker that, when she asked a developer whether they had a grocery store nearby, he said no, but they have a cigar bar! I’ve often seen exactly the same phenomenon: developers ignoring basic needs and pitching excessively to the high-end of the market, in order to portray the impression of luxury and command a higher price. Our own building (in Beijing) has had vacant retail space on the ground floor for over a year, and we hoped somebody might open a convenience store or dumpling shop, which would be ideal to serve the office commuters in the area. Instead, they just opened a European wine store — prestigious, maybe, but I can’t imagine who in our part of town would actually buy anything there. Much like the luxury-end mall down the street where nobody ever shops.
* Secretary Song encourages a developer friend to participate in a scheme where fellow developers buy and sell properties from each other in order to boost transaction prices and generate “excitement” in the market. He tells him, don’t worry, the price will never go down. Hmmm.
* Song never accepts bribes directly, and you wonder at first whether he just dispenses tips as a favor, or to help accomplish the government’s agenda. But then you hear a phone conversation about Song’s relatives wondering what to do with the cash they collected. This is exactly the way it’s done — and why anyone doing due diligence in China needs to make it a priority to check out the relatives and any cash flows involving them.
* Insincere local officials tell residents how wonderful it is that the government is revitalizing the neighborhood, all the while conniving at how to remove them as quietly and cheaply as possible.
* When Haiping is reunited with her daughter, the little girl barely recognizes her and clings to her grandmother. I’ve frequently been astounded at how readily Chinese families — parents and children, husbands and wives — split up for extended periods of time to pursue educational or economic opportunities in different cities or even countries. (This phenomenon might come as a surprise to those who have heard so much about the emphasis Chinese culture places on family). From what I’ve seen, it usually causes a great deal of heartache and often ends very badly.


The other day, when I spoke at the American Chamber of Commerce, I mentioned Woju in the context of our discussion of the real estate sector, and whether a bubble exists or not. Virtually all of the Chinese faces in the audience nodded, having either watched the show or heard of it. Many of my students at Tsinghua have mentioned the show to me, and it evidently touched a nerve with them as well. No wonder the series, with its unvarnished take on so many sensitive issues, made the authorities nervous. All of which makes “Dwelling Narrowness” must-see TV.

------------
Patrick Chovanec is a professor at Tsinghua University's School of Economics and Management in Beijing, China. He blogs at http://chovanec.wordpress.com/

http://www.realclearworld.com/blog/2009 ... wners.html

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Sat Dec 19, 2009 12:18 pm
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Post Re: INTERNATIONAL ECONOMIES
Greek Woes Hit Euro, Bank Stocks

BY KATIE MARTIN AND EMESE BARTHA

LONDON--Greek debt worries continued to weigh on European financial markets Thursday, pulling down the euro and pressuring bank stocks.

The euro slumped to its lowest level against the dollar in three months in the wake of a downgrade of Greek sovereign debt by ratings firm Standard & Poor's late Wednesday.

The move from Standard & Poor's came days after a parallel move from Fitch Ratings. While fairly predictable, the downgrade has intensified the gloom surrounding euro-zone public finances.

The euro fell to its lowest level against the dollar since Sept. 4, with the common currency sliding as far as $1.4304 ...

http://online.wsj.com/article/SB1000142 ... ld_markets

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Mon Dec 21, 2009 3:30 am
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Post Re: INTERNATIONAL ECONOMIES
As China Rises, Economic Conflict With West Rises Too
By KATRIN BENNHOLD

DAVOS, Switzerland — As recently as 2008, when China was still an emerging economy eager to put its best foot forward for Western consumers, it lifted censorship on several Web sites before the Beijing Olympics. At the same time, it responded to entreaties from U.S. and European politicians, allowing its currency to appreciate against the dollar.

China is no longer emerging. It has emerged — sooner and more assertively than had been expected before the wrenching global financial crisis, which badly damaged all the established industrial powers, from the United States to Europe and Japan.

These days, the renminbi is frozen at an undervalued level, and Internet controls are stricter than ever — even as Google, one of America’s most prominent companies, threatens to leave.

The severe recession has fast-forwarded history, catapulting an unprepared world into a period of uneasy cohabitation between the United States, the No. 1 economy, and its eventual successor.

“China is the West’s greatest hope and greatest fear,” said Kristin Forbes, a former member of the White House Council of Economic Advisers and one of hundreds of top officials and executives flocking to this winter resort for the annual World Economic Forum, which is taking place Wednesday through Sunday.

“No one was quite ready for how fast China has emerged,” said Ms. Forbes, a professor at the Massachusetts Institute of Technology. “Now everyone is trying to understand what sort of China they will be dealing with.”

For the first time, economists point to Chinese spending — not the U.S. consumer — as the key to a global recovery. China’s gross domestic product could overtake that of the United States within a decade, one report predicted this month, while others speculated about when the renminbi might start to challenge the dollar as the world’s reserve currency.

And as developing countries everywhere look for a recipe for faster growth and greater stability than that offered by the now-tattered “Washington consensus” of open markets, floating currencies and free elections, there is growing talk about a “Beijing consensus.”

China’s rise will be on prominent display in Davos this week, with the biggest Chinese delegation in the World Economic Forum’s history. The local Chinese restaurant has been fully booked since early January. The 54 Chinese officials and executives — including the presidents of the country’s sovereign wealth fund and export-import bank — were expected not only to rub shoulders here but also, as one put it bluntly, to “go shopping.”

When the United States was snapping at the heels of the British empire, the global hegemon of the early 20th century, the situation caused plenty of friction, even though both countries spoke the same language, shared similar cultures and were liberal democracies.

China, in contrast, is a Confucian- Communist-capitalist hybrid under the umbrella of a one-party state that has so far resisted giving greater political freedom to a growing middle class. Now its ascendancy is about to set off what many officials and experts see as a backlash on both sides of the Pacific.

“It’s not surprising that China’s remarkable economic rise would be unsettling to some,” said Pascal Lamy, the director general of the World Trade Organization.

So far, the backlash against China has been largely rhetorical. Stephen Roach, the Asia chairman of Morgan Stanley, counts 45 anti-China legislative measures introduced in the U.S. Congress between 2005 and 2007. None passed.

That could change, as tricky midterm elections loom in the United States and politicians there and in Europe become more outspoken in blaming China’s currency peg to the dollar, which gives its industries a competitive edge, for rising joblessness at home.

Some targeted tariffs have been imposed in recent months. Washington has penalized imports of Chinese tires and coated paper products. Both the United States and the European Union are restricting Chinese steel.

But none of those measures go as far as climate change proposals in France and the United States, which call for border taxes on products from countries — China in particular — that do not accept higher costs for carbon emissions in producing energy and making goods. If “the U.S. opts for friction,” Mr. Roach said, “the Chinese can be expected to respond in kind.”

China has its own version of political jockeying. Several foreign companies already complain that doing business in China has become more difficult. Lured until a few years ago by tax rates less than half of those applying to Chinese companies, executives now cite an increase in red tape and a growing number of “buy China” mandates from government procurement offices.

The standoff with Google has illustrated the difficulties foreign business faces in China. It has also starkly raised the question of who will have the upper hand in future negotiations.

“The operating environment is tougher than ever for Western companies,” said James McGregor, head of the government relations committee of the American Chamber of Commerce in China. “But unlike Google, most Western companies also need China more than ever.”

China is the biggest recipient of foreign direct investment in the world: 450 of the Fortune 500 companies have business presences there, and many of those still reeling at home are doing brisk business in China. “G.M. is hurting anywhere else, but here things are quite profitable,” Mr. McGregor said.

Business interests in China could make it harder for Western politicians to lash out. “It’s a situation the U.S. was in for a long time,” said Ms. Forbes, the M.I.T. professor. “Many people didn’t like U.S. policy, but you had to be in the U.S. market.”

If business executives are looking to China for its low manufacturing costs and sizable market, political leaders are studying a state perceived to have found a recipe for lifting millions out of poverty with fast growth, even if that means a stiff measure of domestic repression. “You hear more and more people talking about a Beijing consensus,” Ms. Forbes said.

But what exactly is the Beijing consensus? Some see it as a form of economic management with greater government involvement that is on the rise across the world. Others interpret it to mean more strictly controlled capital markets, which have made a re-appearance even in previously open countries like Brazil. Policy makers in Malaysia and Dubai focus on replicating China’s special economic zones, which afford generous terms to foreign investors in manageable geographic areas.

Some suggest that China’s lack of democracy is an advantage in making unpopular but necessary changes. “It is more challenging for democratic systems because every day they come under public pressure and every short period they have to go back to the polls,” said Victor Chu, chairman of First Eastern Investment Group in Hong Kong, the largest direct investment firm in China. “China is lucky to have the ability to make long-term strategic decisions and then execute them clinically.”

With China’s rising clout, the West has less leverage over Beijing. When China was seeking to join the World Trade Organization a decade ago, it accepted compromises to U.S. and European demands. At climate talks last month in Copenhagen, however, China blocked a comprehensive deal and refused to go beyond its earlier promises. Portrayed as a deal breaker in the Western media, at home it was celebrated as the country that stopped the West from imposing its terms on developing countries, Mr. Chu said.

Western diplomats complain about the way Beijing is dragging its feet more than Moscow on sanctions on Iran’s nuclear program and is propping up unsavory regimes across the world in its hunt for the natural resources to power its growth.

Some say Chinese officials are using their country’s $2.4 trillion in foreign currency reserves as a bargaining chip, knowing that any hint of reducing those reserves would rattle currency markets.

“As China is emerging on the global stage with unprecedented power and influence,” said David Shambaugh, a professor of political science and international affairs at George Washington University who is in China as a Fulbright scholar, “it is not proving to be the global partner the United States and E.U. seek.”

In the world of power politics, that is not particularly surprising. Like many Western countries, China will act only when it is in its interest.

Mr. Chu of First Eastern Investment said he expected China to resume a gradual appreciation of the renminbi later this year, not because Washington was lobbying for it but because signs of inflationary pressure and bubbles in the Chinese credit and housing markets were mounting. This month, the Chinese authorities raised interest rates and moved to curtail bank loans.

Kenneth Rogoff, an economics professor at Harvard University who just spent two weeks in China, warns that the country will face its share of economic troubles in the years ahead. But that will not change the underlying trend, he said.

While China remains much poorer than the advanced industrial powers of the West on a per-capita basis, its rapid growth should enable it to pass Japan this year as the world’s second-largest economy.

A new report by PriceWaterhouseCoopers predicts that China could overtake the United States as the largest economy as early as 2020. In 2003, Goldman Sachs made waves by suggesting that the Chinese G.D.P. might match that of the United States by 2041. Five years later, the forecast was revised to 2027.

According to Mr. Rogoff, over the next four decades or so, the Chinese renminbi will gradually come to rival the dollar as the world’s leading reserve currency, making China’s response to its increasingly central role in the global economy critical.

The risk, Mr. Shambaugh of George Washington University said, is that “the world will be asking more and more of China but getting less and less in return.”

http://www.nytimes.com/2010/01/27/business/global/27yuan.html?hp

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Tue Jan 26, 2010 10:10 am
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Sovereign debt fears trigger plunge in global markets

February 5, 2010

in Economy, International, U.S.

(WSWS) — Stock markets in the US, Europe and other regions plunged yesterday in response to growing fears over the size of sovereign debt in several countries. Greece is on the verge of national bankruptcy and international investors are sceptical about the government’s ability to implement the savage cuts to wages and social spending required to lower its deficit from 12.7 percent of gross domestic product to just 3 percent by 2012. Portugal and Spain face a similar situation.

Underlying the crisis in the eurozone is the question as to whether US capitalism can finance its mounting debts and remain solvent in the long term. On Wednesday, Moody’s Investors Service warned that America’s triple-A sovereign credit rating will soon come under pressure unless economic growth is higher than forecast, or the Obama administration moves to reduce the fiscal deficit by initiating new and deeper spending cuts. Moody’s warned that the current US debt trajectory was “clearly continuously upward”.

This year’s US budget deficit of nearly $1.6 trillion is equivalent to 10.6 percent of GDP, a record high since 1945. As a proportion of GDP, the US deficit is not far off Greece’s but is higher than Spain’s and twice the eurozone average. Only the dollar’s status as the world currency has so far prevented Washington from coming under the same pressures as Greece and other southern European countries.

Yesterday’s market decline began in Europe after European Central Bank President Jean-Claude Trichet issued what was reported as an “unusually stern warning” that other eurozone countries as well as Greece required “strong reforms” to cut their deficits. Spain’s leading share index closed 6 percent lower, Portuguese shares lost 5 percent, and the Greek index declined 3.3 percent. London’s FTSE100 finished down 2.2 percent to its lowest level since last November. The euro fell to a seven-month low against the dollar.

Yesterday’s sell-off on Wall Street was partially due to worse than expected employment data. Initial claims for jobless benefits rose last week, dampening expectations of any improvement in the official unemployment rate that is to be updated today. The Dow Jones index briefly fell below the 10,000 mark before closing at 10,002—2.6 percent lower. This was its worst one-day decline since April 2009. The Dow has lost 6.5 percent in the past fortnight. Other New York indexes also finished lower yesterday—the S&P 500 lost 3.1 percent and the Nasdaq 3 percent.

Asian markets were mostly lower. Japan’s Nikkei index was down 0.5 percent while China’s Shanghai Composite lost 0.3 percent.

con. - long article

http://www.inteldaily.com/2010/02/sover ... ily.com%29

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Fri Feb 05, 2010 11:53 am
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Post Re: INTERNATIONAL ECONOMIES
Hat tip to guanosphere

Quoting guanosphere:
Quote:
stealth bank run on Greece by the wealthy ?



Super-wealthy investors move billions out of Greece

Investors withdraw up to €10bn from Greece as government prepares tax crackdown to cut down deficit

* Helena Smith
* The Observer, Sunday 7 February 2010

A staggering €8bn-€10bn (£7bn-£8.7bn) may have been taken out of Greece by private investors since it became engulfed by economic turmoil in November.

Under pressure from the European Union and international markets to rein in the nation's €300bn debt, socialist prime minister, George Papandreou, announced last week that he would have to enforce tough deficit-cutting measures. But the coming austerity package is leading panicked wealthy Greeks to divert their savings out of the country.

"In the last four to six weeks a lot of money has been moved abroad; I've heard extraordinary figures," analyst, Kostas Panagopoulos said.

"People are moving funds either because they don't trust our banking system, want to avoid what they fear will be taxes on deposits or are simply anxious about the future of our economy."

Traditionally, the country's super-rich, not least ship owners and mercantile elite, have favoured the Swiss bank and off-shore account. But now huge sums are also being spirited away to banks in Cyprus. "Very big transactions are going through Cypriot banks," added Pana­gopoulos. "Greeks feel that Cyprus is not only close, but safe."

In the 29 years since Greece entered what was then the European Community, it has increasingly become divided between the very rich, who live in Hollywood-style opulence in the outer suburbs, and the poor, who are forced to survive on pensions of €500 a month.

While a fifth of the population lives beneath the poverty line, some 20% of Greeks are believed to earn more than €100,000 annually – even if, according to income tax records, 90% declare salaries of less than €30,000 a year.

"Greece has a lot of rich people who are not being taxed properly because there is so much tax evasion," finance minister Giorgos Papaconstantinou, told the Observer. "If you look at the actual numbers, you will see that the number of people declaring over €100,000 a year is roughly 15,000," he said. "I don't think that there is anyone in this country who believes there are only 15,000 Greeks earning more than €100,000 a year."

The growing flight of funds from Greece has whipped up much resentment among the public. "It's revolting," said one popular radio chat-show host last week. "After pillaging the country, they flee with their ill-gotten gains at the very mention of the word tax."

http://www.guardian.co.uk/world/2010/fe ... lions-debt

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Sun Feb 07, 2010 12:07 am
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Post Re: INTERNATIONAL ECONOMIES
from Twitter

guanosphere
Quote:
“The fate of the world economy is now totally dependent on the growth of the U.S. economy, which is dependent on the stock market, whose growth is dependent upon about 50 stocks, half of which have never reported any earnings.” Sleep well......

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Fri May 14, 2010 6:30 am
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Post Re: INTERNATIONAL ECONOMIES
The New World Order is Now Complete
by John Galt
May 10, 2010

It took them a long time. I was stupid not to realize the obvious fact. Here we are, finally, united in a new world order of happiness and a future so bright that I have to wear shades. For most people much like myself, we always thought it was the United States and the armed citizenry that stalled and prevented the establishment of this new order, both economic and political. Sadly us Americentric types focused on our nation as the center of the universe failed to see the big picture and I did not realize until tonight that it was not Presidents Bush and Obama that prevented the new order from taking hold. It was not the Tea Party, Republican Party or the Libertarian Party which obstructed the globalist regime. It was not Joe Redneck, Joe Six-Pack or Joe the Plumber that intimidated or slowed down the establishment of this order.

It was our friends in Europe. . . . .

Despite years of people calling others ‘tinfoil freaks’ of whom I have been guilty of that years and years ago, the conspiracy is not that nor has it been for two years now. The conspiracy has turned into a course of action where people are being deceived into believing that according to the leaders of the West, aka the United States and Europe, that there is no other choice if we wish to survive as a civilization. Common sense tells the informed citizen otherwise but the panic and hysteria created on an almost scheduled, regular basis, be it an oil spill in the Gulf of Mexico, financial crisis, war, or terrorist act keeps many citizens from understanding or realizing the activities being undertaken behind the scenes. How many people realize that the new financial reform package expands the powers of the Federal Reserve to the point of extra-Constitutional authorities not implied nor given to the Executive Branch as written within that damned piece of paper? How many people who run a small business now understand that starting in 2012 you have to give a 1099 to every vendor you purchase $600 or more from? How many citizens understand that Homeland Security is working with the Congress to create a standardized National Identification program under the guise of the Health Care legislation to provide the ability to monitor not just the consumption patterns of citizens but the transportation habits, domestic and international, of our citizens to enable further taxation due to the risks created by those who can afford to travel to and fro?

continues @ http://johngaltfla.com/blog3/2010/05/10 ... omplete-2/


Fri May 14, 2010 12:05 pm
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Post Re: INTERNATIONAL ECONOMIES
Good post Shy thanks :clap :clap

Heres the rest

And that’s just the United States side of the equation. Once the European Parliament convenes when the dust settles and the last fire from the riots are extinguished, the Eurosheeple much like the Amerisheeple will begin to understand that gee, we really do have a lot in common and perhaps unifying our financial systems and legal systems would be a logical extension from where we are now. The fact that we just put their precious European Monetary Union into debt to the Federal Reserve via the currency swaps and the International Monetary Fund loan program does sort of entitle those who are in charge to demand concessions of the citizens to insure a guarantee of repayment and streamlining of operations now, doesn’t it?

The next wave of the now completed new order will be to unify financial and corporate regulatory regimes because we “have to” and thus with that logic our sovereign rights along with the individual participants within the EU will agree to do the same. Beyond that, the human rights campaigns masked by their Eurosocialist masters will demand we in turn surrender key freedoms and rights as provided by the Constitution to insure financial and corporate stability, thus leaving the American citizen with no voice because we will have none in this matter.

The end game arrived with little fanfare but as expected a warning shot across the bow of the world economies with the shock of last Thursday. The Untied States has a banking cartel which was already engaged to be married to their Eurosocialist brethren but the right trigger event was never created to insure that the “people” would cooperate in such an event. Americans, due to the demographic shift, will support any and all actions that guarantee their retirement accounts as large numbers of the Baby Boomer generation is more than happy to sell the rest of us out to insure a comfortable period of time from retirement to their death. The Eurosocialist want to protect their 32 hour work week with 12 weeks of vacation so they are willing to accept a more “diversified” society if the United States citizens are willing to pay for it, thus they will accept their new immigrants, their new laws, and their new compliance with a budding world council to manage their affairs because after all the “New World” is going to share in their pain.

Thus the table has been set. Elections are somewhat irrelevant in the United States after the 2010 mid-term election unless upwards of 50% of the incumbents are turned out at every level, be it dog catcher or Congressman. The path has been set upon not by a desperation to insure world peace, as many thought it would in the late 1970’s and early 1980’s, but instead a dying desire to make sure they can retire with their surround sound DVD player and golf every Thursday with Bob at the community country club. The Greatest Generation, the ones who fought and died during World War II and endured the pains of the Great Depression of the 1930’s have finally given way. The Sellout Generation, their spawn, will insure world peace and stability for a generation to come.

By enslaving us all to the whims of a cartel of corporatist Marxists hell bent on a twisted Fascist world domination.

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Fri May 14, 2010 12:23 pm
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Post Re: INTERNATIONAL ECONOMIES
German ban short-selling stocks, euro govt bonds-TV
Tue May 18, 2010 12:47pm EDT

BERLIN, May 18 (Reuters) - Germany plans to ban naked short-selling on stocks and euro government bonds, German all-news network N-TV reported on Tuesday.

German coalition sources told Reuters earlier that Finance Minister Wolfgang Schaeuble plans to ban short-selling from midnight.

Economy Minister Rainer Bruederele told Reuters that it was possible the short-selling ban would be quickly enacted.

No other details were immediately available.

http://www.reuters.com/article/idUSBAT00546320100518

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Tue May 18, 2010 2:33 pm
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Post Re: INTERNATIONAL ECONOMIES
Iincreasing concern of international economies, markets & such is on the rise. A lot is going on right now. Someone who does a good job communicating these concerns is Denninger of The Market Ticker. Here are a couple quotes to get you going. If interested his link is: http://market-ticker.denninger.net/

From: The German Government Has Had Enough

". . . it appears that instead of telling all the banksters what they were going to do and "getting permission" first, or even discussing it with other governments, the German Government did what all governments should do - make up your mind and then do it without giving a good damn whether the banksters or other governments like it - and without giving them input into the decision or notice that it's coming. . . . "

From To Greece: Nut Up Or Shut Up

". . . . Depart the Euro and at the same time declare by fiat all Euro-denominated Greek debt held by anyone who is not a Greek national (or a Greek-chartered bank holding said debt entirely within Greece) worthless. . . . .

If the Greek people are going to bear the costs they should get all the benefits, not the international banking cartel.

There's not a thing that the world could do about a move like this, but it would put a spike into the bankster concept of looting both citizen and sovereign alike without regard to the consequences.

IT IS TIME FOR A NATION TO STAND UP AND DO IT, AND GREECE IS IDEALLY POSITIONED TO DO SO."


Wed May 19, 2010 10:53 am
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Post Re: INTERNATIONAL ECONOMIES
Great post Shy thanks for postin it :clap

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Wed May 19, 2010 12:17 pm
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Post Re: INTERNATIONAL ECONOMIES
The Buzz
Markets go on a Hungary strike
By Paul R. La Monica, editor at large June 4, 2010: 4:29 PM ET

The Buzz is now on Twitter! Follow me @LaMonicaBuzz

NEW YORK (CNNMoney.com) -- Just when we all got used to referring to Europe's fiscal crisis with the tidy little acronym of the PIIGS, another European country is angling for admittance into the bad debt club.

Stocks tumbled Friday, and while a big reason for that was the disappointing jobs report, futures were already lower before the jobs numbers came out because of new concerns about Hungary.

How low can it go? The euro briefly dipped below $1.20 Friday as debt fears out of Hungary (which does not use the euro) rocked the markets.

According to several reports, a spokesman for the new prime minister of Hungary, a member of the European Union that does not use the euro currency, said that talk of a Hungarian default is not "an exaggeration"

Those comments caused Hungary's currency, the forint, to plunge and also led to another sell-off in the euro. The euro dipped below $1.20 against the dollar, another 4-year low and an important technical milestone on what some experts think is a road to eventual dollar parity.

"The euro has been moving lower and it will continue doing so. The question now is the pace of the decline, not whether it will decline," said Vassili Serebriakov, currency strategist with Wells Fargo in New York.

So what do the latest Europe woes mean for the U.S. economy? It's not great news.

Preston Keat, director of research with political research and consulting firm Eurasia Group in London, wrote in a note Friday morning that Hungary is "not yet in a Greek situation" but it is "wobbly."

That hardly inspires confidence. So any hope that the debt crisis could be contained to the three most troubled of Southern Europe's PIIGS (Portugal, Spain and Greece -- Ireland and Italy are the other two) may have been dashed by the new fears about Hungary.

Maybe it's time for a new acronym? PIIHGS with a slient H for Hungary? That might even be too narrow. If Hungary is in trouble, it stands to reason that other emerging markets in Central and Eastern Europe may also succumb to debt problems.

"Hungary has looked like one of the weaker Eastern European nations for a while and that says a lot since that's an area that has been underperforming for some time," Serebriakov said.

If other Eastern European nations start to wobble, the "healthier" countries in Europe may not be able to stand idly by and watch the continent fall apart.

Dan Cook, senior market analyst with IG Markets in Chicago, said there are growing worries about how much exposure big European banks have to the debt of the most troubled European countries.

So as painful as it may be, the European Union, and likely the IMF as well, might have to step in to stabilize the euro and prevent the crisis from intensifying.
Hungary in the market goulash

"The reality is that the stronger countries in the euro zone, including Germany, France and the Netherlands, are in much better shape," said John Stoltzfus, senior market strategist with Ticonderoga Securities, an institutional trading firm in New York.

"They are going to have to help their weaker brethren get through this. That means austerity programs, which will shave off growth in Europe's economy for several years," he added.

Julian Thompson, co-manager of the Threadneedle Emerging Markets fund in London, said that this may only be true to a point though. Political pressures could force Europe's more stable countries to only focus on the biggest problems in Europe.

"Hungary, to be honest, is a bit of a sideshow. Spain is more important. The Spanish property bubble hasn't been pricked yet and that's going to put more pressure on the euro for some time," said Thompson.

Regardless of what happens in Hungary though, one thing is clear: Europe is a mess. And continued weakness throughout Europe, at the very least, will make it tougher for the U.S. economy to recover.

It may not lead to a double-dip recession but a sluggish European economy is likely to lead to more woes for companies that do big business in Europe.

In addition to the currency hit that companies will take when they report earnings, the bigger concern is that a slowdown in consumer demand in Europe would mean a lower level of exports to Europe. And that's the last thing that the still-fragile U.S. economy needs.

Reader comment of the week. I wrote about Europe's woes earlier in the week as well. And while much of the focus has been on the precipitous plunge in the euro, one reader astutely pointed out that people need to put the euro's decline in historical context.

"I don't see why people are so alarmed by euro around $1.20, it's right in the middle of its usual historical range ($1.10-$1.30). If anything, the recent pullback is a return to normality assuming it stabilizes a bit. The spikes in the last three years are an anomaly," wrote Iikka Keränen.

- The opinions expressed in this commentary are solely those of Paul R. La Monica.

http://money.cnn.com/2010/06/04/markets/thebuzz/

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Sun Jun 06, 2010 1:52 pm
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Post Re: INTERNATIONAL ECONOMIES
Hat tip to Once4All

IRELAND DOWNGRADED

Credit agency Moody's has downgraded Ireland's government bond ratings to Aa2, blaming banking liabilities, weak growth prospects and a substantial increase in the debt to GDP ratio.

However, Moody's lead analyst for Ireland Dietmar Hornung said it was a "gradual, significant deterioration, but not a sudden, dramatic shift", and the agency believed Ireland has "turned the corner".

The general government debt-to-GDP ratio was at 64 per cent at the end of last year, up from 25 per cent before the financial crisis took hold, and is continuing to rise.

“Today’s downgrade is primarily driven by the Irish government’s gradual but significant loss of financial strength, as reflected by its deteriorating debt affordability,” said Mr Hornung.

http://www.irishtimes.com/newspaper/bre ... king7.html

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Mon Jul 19, 2010 6:54 am
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Post Re: INTERNATIONAL ECONOMIES
Ireland Long-Term Sovereign Credit Rating Cut by S&P
By Ben Livesey and Robert Burgess - Aug 24, 2010 5:17 PM ET


Aug. 24 (Bloomberg) -- Bloomberg's Matt Miller, Dominic Chu and Julie Hyman discuss today's decision by Standard and Poor's to cut Ireland's long-term sovereign credit rating to AA- from AA. Nobel Prize-winning economist Joseph Stiglitz told Dublin-based RTE Radio in an interview broadcast today that the European economy is at risk of sliding back into a recession as governments cut spending to reduce their budget deficits. ....

Ireland has suffered the worst recession on record as a decade-long housing boom ended and the financial system came close to collapse. Photographer: Simon Dawson/Bloomberg

Ireland’s long-term sovereign credit rating was cut one step to AA- from AA by Standard & Poor’s, which cited the projected cost of supporting the nation’s financial sector.

“The negative outlook reflects our view that a further downgrade is possible if the fiscal cost of supporting the banking sector rises further, or if other adverse economic developments weaken the government’s ability to meet its medium- term fiscal objectives,” S&P said today in a statement.

continued here: http://www.bloomberg.com/news/2010-08-2 ... o-aa-.html

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Tue Aug 24, 2010 9:29 pm
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Hat tip to Guanosphere

ECB Stepped In To Rescue Ireland

Another sovereign bankruptcy, another stick save by the ECB. The FT has confirmed Friday's rumors that it was just the ECB's intervention that prevented domino number two - Ireland - from toppling, and taking with it all of Europe. "The European Central Bank intervened to stabilise the Irish bond markets on Friday after a report by a leading UK bank triggered investor fears that the country might turn to the international community for a multibillion-euro bail-out."

con. here: http://www.zerohedge.com/article/ecb-st ... ue-ireland

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Post Re: INTERNATIONAL ECONOMIES
Glass-Steagall.Silent Run on the Bank of Ireland by Corporate Depositors
November 14, 2010 • 11:54AM
There has been a silent run by corporate depositors at the Bank of Ireland which is now Ireland's biggest lender and is 36% owned by the government. The bank announced that in August and September there were withdrawals by corporate depositors. Citing banking sources, the Irish Times suggests that the withdrawal could have been as much as EU10 billion. The bank said while the situation had "stabilized" there nonetheless continued to be "outflows of ratings-sensitive customer deposits in our capital markets business." On top of that, mortgage arrears at the bank continue to increase." The bank admitted it continues to be totally dependent on the European Central Bank's emergency unlimited liquidity window for funding where it receives short-term credits of no longer than three months' duration.

There is a direct British connection. The Bank of Ireland is in a joint venture with the British Post Office Bank which operates 11,500 branches and is used primarily by normal depositors. Also not widely reported this week is the fact that this subsidiary was reorganized as Bank of Ireland (UK) plc as of November 1, so as to allow the deposits to fall under Britain's deposit guarantee scheme. This was no doubt a pre-emptive move to avoid a run on the bank as the crisis worsens.

While Inter-Alpha's Allied Irish Bank's small banking operation in the U.K. also falls under the British deposit insurance scheme, the U.K. subsidiary of Anglo Irish Bank, now 100% owned by the government, is not covered by the U.K. guarantee, but only the Irish guarantee which is good as long as the Irish government is solvent.

http://www.larouchepac.com/node/16456

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Sun Nov 14, 2010 8:55 pm
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 Re: INTERNATIONAL ECONOMIES
That's the Goober-mint for you :yamon :mrgreen:

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Sun Nov 14, 2010 9:01 pm
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Post Re: INTERNATIONAL ECONOMIES
from Mish's blog

Friday, November 19, 2010 11:51 AM

Run on Allied Irish Banks, Customers Pull 17% of Deposits; Ghost Estates and Broken Lives: the Human Cost of the Irish Crash

A slow steady bleed has turned into a mad dash for cash at Allied Irish Banks. Allied Irish Banks has had to rely on Central Bank funding as customers withdraw $18 billion, a stunning 17 percent of its deposit base. Without Central Bank funding, there would indeed be outright panic.

Forbes reports Allied Irish says it's lost 17 percent of deposits

Quote:
Allied Irish Banks announced Friday it has lost a staggering euro13 billion ($18 billion), or 17 percent, of its total deposit base since June in the latest evidence of cash flight from Ireland's debt-crippled banking sector.

Earlier this month two other banks, Bank of Ireland and Irish Life & Permament, reported suffering losses of more than 10 percent of deposits in recent months.


Remainder of article here: http://globaleconomicanalysis.blogspot. ... omers.html

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Fri Nov 19, 2010 6:02 pm
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