Saturday, May 1, 2010

World Financial Report, April 30, 2010

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The Economist - 01 May 2010

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Feldstein: Greece Will Default and Portugal May Be Next

Harvard economist Martin Feldstein — who 20 years ago warned that the euro would prove an “economic liability” — says Greece will default on its bonds and other euro zone nations may follow.

“Greece is going to default despite all the talk, despite the liquidity package,” Feldstein says, adding that Feldstein said other members of the 16-nation euro area may also default, with Portugal the main candidate.

Standard & Poor’s this week downgraded Portugal and Spain as well as Greece. (more)

U.S is in worst shape than Greece! Nouriel Roubini Discusses U.S.. Government Deficits

Thomas Jefferson on Politics & Government

Money & Banking

Banking institutions, paper money, and paper speculation are capable of undermining the nation's stability and could be a danger in time of war. The Constitution does not empower the Congress to establish a National Bank. Rather than trust the nation's currency to private hands, the circulating medium should be restored to the nation itself to whom it belongs. (more)

Business Week - May, 5 2010

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Dennis Kucinich - We Have Finite Money For Americans But Unlimited Money For Wars,Wall Street?

Goldman’s Shares Plunge on Inquiries and Downgrade

Already facing investigations on two fronts into its practices in the mortgage market, Goldman Sachs came under pressure from investors as well on Friday.

After reports on Thursday evening that federal prosecutors had opened an investigation into trading at Goldman, raising the possibility of criminal charges against the Wall Street giant, the firm’s stock was downgraded on Friday by Standard & Poor’s from hold to sell.

Investors responded by sending the stock down more than 8 percent in morning trading, to $147.10, contributing to an overall decline in financial shares on Wall Street. (more)

Forget Goldman. Buy gold, man?

The financial story of the week was clearly the epic Goldman Sachs hearing in the Senate.

Between the fabulous Fab's first appearance, all the sports gambling and casino analogies and Carl Levin's scatological focus on "crap pools" and "sh*tty deals," the more than ten-hour-long hearing didn't lack for drama.

But here's a story you might have missed if you were focusing too much on Goldman (GS, Fortune 500). An asset that had fallen out of favor earlier this year is suddenly glittering again.

Forget about Goldman. You might be wondering if it's time to buy gold, man. Gold is now trading around $1,180 an ounce. It's up about 6% this month and is getting closer and closer to the all-time intra day high of about $1,227 from December. (more)

Kiplinger's Personal Finance - June 2010

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The Price of Fishmeal

Another commodity rising in price -- fish food. Not the stuff you feed your goldfish, but fish meal.

“We use fish meal to feed pigs and chickens and in fish farming,” says Chris Mayer. “About 40% of all the fish we consume is farmed fish. The UN Food and Agriculture Organization said that the fish trade is ‘one of the world’s most hotly traded food commodities.’ The value of exports in 2008, the latest figures, topped $100 billion.

“Fish meal is an important commodity in the food chain. It’s one of the world’s most internationally traded commodities. The average ton of fish meal travels 3,000 miles to reach its end market.

“Today, we see the effects of what can happen to that fragile fish stock supply. We’ve got fish meal prices hitting all-time highs, as the earthquake that hit Chile wiped out the world’s second largest exporter of this commodity.” Agora Financial

Greek Contagion NOT Contained

“With no restraints on capital flows within the European Union,” Eric Sprott of Sprott Asset Management explains, “Greek savers are free to transfer their assets elsewhere. Given that bank deposit guarantees in Greece are the responsibility of the national government, rather than the European Central Bank, we suspect Greek citizens are pulling money out of their banks because they question their government's ability to honor its domestic deposit guarantees.

“We envision Greek depositors asking themselves how a government that can't raise enough money to stay solvent can then turn around and guarantee their bank deposits? It's a fair question to ask.

“It's a vicious spiral from financial crisis to sovereign debt crisis to banking crisis, and there is no reason it can't spread to other European countries suffering from similar fiscal imbalances. With Spain and Portugal next in line with their own sovereign debt issues, we can expect depositors in these countries to make similar runs to the bank for their cash.”

Indeed. Look at what’s happening to the credit default swaps on Spanish and Portuguese banks…

Spain’s looking twice as risky as Germany and France. Portugal, three times. (more)