Saturday, February 6, 2010

World Financial Report, Feb 5, 2010

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Wells Fargo Bets $1 Billion That Rates Will Rise

Well Fargo gave up as much as $1 billion in return last year by trimming its bond holdings, betting that interest rates will rise.

Time will tell whether the strategy proves successful.

The stance by Wells, the country’s fourth largest bank, marks a sharp contrast to the three bigger ones.

While Wells cut its bond portfolio by $34 billion in the second half of last year, JPMorgan Chase, Bank of America and Citigroup increased their holdings by an average of $35.5 billion, Bloomberg reports. (more)

The Economist - 06 February 2010

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Business Week - February, 15 2010

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Real Unemployment 18 Percent - Will Stocks Falter?

The unemployment picture painted by today’s jobs report headlines is much rosier than reality. Yet, the Dow broke below 10,000 for the first time in months. The real unemployment number reported by the Bureau of Labor Statistics (BLS) is much higher and scarier than they want you to believe. What's next?
How do fish get caught? They open their mouth. How do investors get ensnared or misled? They believe in non-existent phenomenons like a “jobless recovery.”

Surprising as it is, for nearly a year, investors have shrugged off mounting jobless claims and rising unemployment as an ingredient that is not really required for an economic recovery.

Yesterday’s (2-4-10) announcement by the Department of Labor that claims for unemployment benefits rose by 8,000 to 480,000 sent stocks spiraling. (more)

Secret summit of top bankers

THE world's top central bankers began arriving in Australia yesterday as renewed fears about the strength of the global economic recovery gripped world share markets.

Representatives from 24 central banks and monetary authorities including the US Federal Reserve and European Central Bank landed in Sydney to meet tomorrow at a secret location, the Herald Sun reports.

Organised by the Bank for International Settlements last year, the two-day talks are shrouded in secrecy with high-level security believed to have been invoked by law enforcement agencies. (more)

Why China Wants Its People To Buy Gold

10 Geopolitical Predictions for 2010 & Short Term Strategic Outlook

A great - and still growing - divergence appeared in 2009 between public statements by leaders and their public performance. The politicized, romanticized theater of increasingly populist “democratic” leaders and media seemed to be of a different planet from activities taking place in the real world.

While a large part of the global population appears still transfixed by words, there is a growing perception that great fissures already rend the global strategic architecture.

This is a trend which will compound during 2010.

There is a widespread belief that the world has “ducked the strategic bullet” of global economic collapse, but this is merely the delusionary euphoria of the severely wounded patient. Severe structural damage has occurred to the key driver of global economic stability, the United States. Most major economies of Western Europe and Asia, although in plight, have been protected in their fall by a complex web of structures and the fact that they were not, in many respects, as leveraged as the US. Britain and Japan, however, remain leveraged in their debt-to-asset ratio, to a death-defying degree. (more)

The Devaluation and Fight for Survival of the American Middle Class – How Three Decades has Shifted the Concentration of Financial Wealth to the top 1

The American middle class ideal is lionized around the world. It is the core of what has made this country great. The land of opportunity and endless wealth so long as people worked hard enough. It was an implicit contract workers made with this country. Well that vision is now quickly coming under attack by the corporate structure with banks being the main culprits leading the American middle class to the edge of financial ruin. The average American is looking at their current economy and wondering what ever happened to the security that was once provided to the “greatest generation” era. The Wall Street crowd after devouring their bailouts is telling Americans that this is simply how the market corrects. Yet at the same time, they are offering record bonuses to their elite. The same banking crowd that led this country to the financial edge is now rewarding itself with massive bonuses (taxpayer funded) while jobs are being lost and no industry is emerging to provide work to the middle class. As tough as it may be for many to swallow we are in a class warfare struggle. That is why you are seeing populist rage growing in both of our entrenchment political parties. (more)

The Bankruptcy of the United States is Now Certain

It's one of those numbers that's so unbelievable you have to actually think about it for a while... Within the next 12 months, the U.S. Treasury will have to refinance $2 trillion in short-term debt. And that's not counting any additional deficit spending, which is estimated to be around $1.5 trillion. Put the two numbers together. Then ask yourself, how in the world can the Treasury borrow $3.5 trillion in only one year? That's an amount equal to nearly 30% of our entire GDP. And we're the world's biggest economy. Where will the money come from? (more)

Marc Faber : US government will go bankrupt

U.S. Stocks Jump in Final Hour, Metals Rally; Dollar Pares Gain

U.S. stocks rose, with the Dow Jones Industrial Average erasing a 167-point drop in the final hour of trading, on speculation the European Union may propose a solution for Greece’s budget deficit. Oil, gold and copper rebounded, and the dollar pared its gain.

The Dow rose 10.05 points to 10,012.23 at 4 p.m. in New York, and the Standard & Poor’s 500 Index rallied 0.3 percent after plunging 1.8 percent in what would have been the biggest two-day slump since March. The MSCI World Index cut its drop in half to 1 percent because of the recovery in U.S. stocks. Oil pared its loss to 1.8 percent and gold and copper climbed at least 0.3 percent in electronic trading after the close of commodities exchanges. The U.S. Dollar Index gained 0.5 percent.

Stocks and commodities had plunged around the world earlier on growing concern European nations will default on their debt. The recovery by U.S. equities showed confidence among investors that a solution will be reached in Europe. The retreat in American shares had been limited after the nation’s jobless rate unexpectedly fell to a five-month low of 9.7 percent. (more)