Friday, December 18, 2009

With Fewer U.S. Opportunities, Home Looks Appealing to Expats

With unemployment at 10% and prospects for finding work bleak, foreign-born professionals who came to the United States in search of better job opportunities and prosperity are now retreating.

Foreign-based companies, particularly in Asia, are using the employment picture in the U.S. as a means to lure former residents home. This comes as a welcome respite for professionals who've experienced layoffs, underemployment and visa issues.

Vivek Wadhwa, a senior research associate at Harvard Law School who has studied these trends, says frustrations about the lack of advancement in the U.S., where salary and promotion freezes have become the norm, are a significant factor in foreign-born professionals' heading home. (more)

Dow Jones Industrial Average

The Commercial Real Estate Default Wave is Here: Commercial Mortgage Defaults Now at 16 Year High

What has been lost in the housing talk recovery is the grim statistics that commercial real estate has fallen 37 percent in value in the last year. This wouldn’t be such a big problem aside from the tiny detail that some $3 trillion in commercial real estate loans are still outstanding. The commercial real estate debacle is already happening with defaults reaching 16 year highs. This is already occurring before many of the commercial real estate loans reach their refinance dates. In some instances banks are simply ignoring non-payment and giving borrowers a few more months or even years. Why? Because they can still claim the note is current and claim the asset at inflated values.

Yet this is a game we are all familiar with. Suspending mark to market has always been a method for the U.S. Treasury and Federal Reserve to skirt any real accounting from Wall Street. If we look at the current FDIC insured bank balance sheet, we can see that many more problems lie ahead for commercial real estate: (more)

Euro to Appreciate to $1.55 in Three Months, Goldman Sachs Says

Goldman Sachs Group Inc. recommended its clients buy the euro versus the dollar, forecasting the common European currency will rise to $1.55 in three months amid an anemic U.S. economic recovery.

The dollar reached a two-month high of $1.4504 per euro yesterday on speculation U.S. growth is gathering momentum and as Greece struggled to address concern that it isn’t doing enough to reduce its debt.

“The recent positive growth impact from the inventory cycle and fiscal stimulus is likely to taper off during 2010,” analysts at Goldman Sachs wrote. “On the other side of the Atlantic, we would assume that a pretty negative scenario for the Greek budget is fully priced given how much sovereign spreads have widened in recent weeks.” (more)

Spring 2010 – A new tipping point of the global systemic crisis

LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009 (1), and that the size of budget deficits preclude any significant new expenditures.

If this public deficit « slip knot » which governments gladly placed around their necks in 2009, refusing to make the financial system pay for mistakes (2) is going to weigh heavily on all public expenditure, it is going to particularly affect the social security systems of the rich countries in always impoverishing the middle classes and the retired, and setting the poorest adrift (3). (more)

Altucher: Invest in Anything but Gold

Buying gold during a recession may not be the best investment, James Altucher, managing partner of Formula Capital, told Yahoo! Tech Ticker.

"I’m so bored of gold already — it's just a rock. I don't like betting on things where there's just one premise — 'Everybody's going to panic so let's buy gold,'" he said.

Investors should instead invest in stocks that are related to the price of gold and hold their own upside, Altucher said.

One of his recommendations is Cash America, the national pawn shop retailer. Altucher said the shops have the "best business model on the planet" by making borrowers pay high interest rates. (more)

The Coming cease trading of COMEX silver???

Recently, I have raised the possibility that silver trading might be terminated on the world’s largest silver exchange, the COMEX (The Commodity Exchange, Inc.), now owned by the CME Group, which in turn is the largest futures exchange in the world. I hope everyone realizes that this is an extreme speculation on my part, and that the likelihood of such an event must be considered remote. Still, I am somewhat haunted by this possibility and I would like to share the reasoning behind my concern. Even if my fears never come to fruition, I feel I would be doing a disservice to subscribers by not fully airing the subject.

Any cessation of trading of COMEX silver would be a very big deal indeed. It would send shockwaves of unprecedented proportions throughout the silver world. It’s not hard to imagine shockwaves extending beyond silver. That’s because the COMEX is the most important pricing mechanism for silver. All silver pricing throughout the world emanates from the COMEX. In this day and age of instant electronic price and news dissemination, any interruption of trading on the COMEX would have immediate and profound implications. (more)

Joyce warns of bigger GFC

THE Nationals Senate leader Barnaby Joyce is openly canvassing an economic upheaval that would dwarf the current global financial crisis, triggered by the US defaulting on its sovereign debt within the next few years.

In unusually pessimistic comments for a senior political figure, Senator Joyce said the US Government was running such large deficits and building up so much debt that it was in a similar position to Iceland or Germany before World War II.

In a Senate estimates hearing on Wednesday night, he asked Treasury secretary Ken Henry what would be the implications of an American debt default for the Australian economy. (more)