Saturday, January 30, 2010

World Financial report, Jan 29, 2010

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Obama Housing Rescue Threatened by Foreclosures, Unemployment

President Barack Obama’s efforts to bolster the U.S. housing market, the trigger of the worst recession since the 1930s, may be undone by record unemployment and repossessions by lenders.

Foreclosures probably will reach 3 million this year, surpassing the record of 2.82 million in 2009, according to Irvine, California-based RealtyTrac Inc. That would more than offset an estimated 448,000-unit rise in home sales, based on the average forecast of the National Association of Realtors, the Mortgage Bankers Association and Fannie Mae.

The housing industry remains a challenge for Obama as he enters his second year of office and government assistance programs near expiration. Data this week showed home sales tumbled after the expected end of an $8,000 tax credit for first-time buyers boosted transactions the prior month. (more)

Forget Gold, It's Time to Think Platinum

When it comes to investing in precious metals, most investors tend to focus on gold and silver. With gold in the midst of a multi-year bull market, the yellow metal gets most of the media attention. Headlines like ‘Gold to Hit $2000 an Ounce’ and ‘Invest in Gold to Cash in on US Dollar Demise’ have appeared almost relentlessly over the past couple of years.

While gold has been the media darling, it’s actually one of the worst performing metals over the last year. Rising gold prices have been less about economic fundamentals, such as rising demand, and more about speculation. For most non-day trading investors, the last thing that you want to do is invest in a market driven by speculators. Before you know it, the speculators have moved on to some other asset, sending the value of your investment plunging, all while you are left holding the proverbial bag, without even knowing what happened. (more)

Rogers: Markets Will Tank Any Day Now

Global equities are "vulnerable to correction" after rallying from their March lows and as governments around the world withdraw stimulus measures, says investor Jim Rogers.

"We're overdue for a correction" Rogers says.

"Stock markets around the world have been going up for the past 10 months," he told Bloomberg.

Also, Rogers says central banks need to tighten the money supply further. (more)

A Growing Share of Americans' Income Comes From the Government

While most eyes were focused on the better-than-expected gross domestic product data for last year's fourth quarter, this week's report from the Commerce Department's Bureau of Economic Analysis also included details on U.S. personal income.

Along with wages and salaries, dividends and interest income, this category includes personal current transfer receipts, which the BEA defines as "income payments to persons for which no current services are performed and net insurance settlements." That is, government social benefits (and, to a very minor extent, net transfers received from businesses).

As you can see from the following graph, while the relationship between personal income and GDP has not changed all that much over the course of the past six decades, the share of income accounted for by transfer payments has jumped more than 200 percent. (more)

List of countries by current account balance

This is a list of countries and territories by current account balance (CAB), based on the International Monetary Fund data for 2007, obtained from the latest World Economic Outlook database (October 2008).[1] Numbers for 2008 should become available in April 2009. Estimates are highlighted. (more)

Greece denies bailout deal as Darling promises to 'provide whatever assistance' is appropriate

Greece and the European Union were last night scrambling to quash fears that the crisis-struck country will need a financial bailout.

Prime minister George Papandreou and EU officials denied reports that European governments were preparing a rescue operation, stressing Greece will take draconian steps needed to cut its budget deficit.

But privately, officials admitted informal talks have been held over a possible bailout. (more)

Marc Faber, On China Bubble

Marc Faber on Bloomberg: This Year Will be Much More Difficult

The Economist January 30th - February 5th 2010

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