11-01-10

GEO-POLITICAL TENSIONS - ISRAEL / KOREA / IRAN

THE GREAT GAME: Currency War Is The Start Of A 21st Century Geopolitical Struggle For Resources  BI

YEMEN

Yemen Covert Role Pushed WSJ

 

SOVEREIGNS

 

GREECE   SPAIN   GERMANY Merkel consigns Ireland, Portugal and Spain to their fate Pritchard Germany has had enough. Any eurozone state that spends its way into a debt crisis or cannot adapt to a monetary union set for Northern rhythms will face “orderly” bankruptcy.   Bondholders will discover burden-sharing. Debt relief will be enforced, either by interest holidays or haircuts on the value of the bonds. Investors will pay the price for failing to grasp the mechanical and obvious point that currency unions do not eliminate risk: they switch it from exchange risk to default risk. “We must keep in mind the feelings of our people, who have a justified desire to see that private investors are also on the hook, and not just taxpayers,” said German Chancellor Angela Merkel. Or in the words of Bundesbank chief Axel Weber: “Next time there is a problem, (bondholders) should be part of the solution rather than part of the problem. So far the only ones who have paid for the solution are the taxpayers.” These were the terms imposed by Germany at Friday’s EU summit as the Quid Pro Quo for the creation of a permanent rescue fund in 2013. A treaty change will be rammed through under Article 48 of the Lisbon Treaty, a trick that circumvents the need for full ratification. Eurosceptics can feel vindicated in warning this “escalator” clause would soon be exploited for unchecked treaty-creep. Mrs Merkel needs a treaty change to prevent the German constitutional court from blocking the bail-out fund as a breach of the EU law, and a treaty change is what she will get. “This will strengthen my position with the Karlsruhe court,” she admitted openly If you strip out the humbug, the Greek package allows banks and funds to shift roughly €150bn of liabilities onto EU governments, or the European Central Bank, or the IMF. Greek citizens are being subjected to the full pain of austerity under false pretences, without being offered the cure of debt relief. An ominous pattern has emerged across much of the eurozone periphery: tax revenue keeps falling short of what was hoped. Austerity measures are eating deeper into the economy than expected, forcing further fiscal cuts. It goes too far to call this a self-feeding spiral, but such policies test political patience to snapping point.   FRANCE Cameron and Sarkozy pursue entente cordiale  FT At the same time, tomorrow’s agreement on defence co-operation is a significant achievement for both leaders which will see the two countries co-operating on the deployment of aircraft carriers and other equipment in the years ahead. “Right from the start, Sarkozy said the defence relationship must be without taboos,” says a senior French official. “Cameron was very receptive to that and said we have to try and do something at this summit that is historic. BRAZIL Rousseff Elected Brazil's First Female President, Defeating Serra  BL Dilma Rousseff said her main goal is to eradicate poverty in Brazil while maintaining a lid on spending after being elected the country’s first female president. JAPAN Japan data fuel fear of return to recession  FT The Nomura Japan manufacturing purchasing managers’ index, which was released on Friday, fell to 47.2 from 49.5, the second monthly contraction in a row, indicating that slowing economic conditions and the strong yen are hurting most Japanese manufacturers.   Sino-Japan dispute overshadows summit  FT China plans manned space station by 2020  FT

Paper weightBuyers fear growing bond bubble  FT

4- STATE & LOCAL GOVERNMENT

5- CENTRAL & EASTERN EUROPE

7- RISK REVERSAL

8- COMMERCIAL REAL ESTATE

9-RESIDENTIAL REAL ESTATE - PHASE II

Snow: Fix Housing or America Will Need Another Bailout   FOX News

Debtors repent by walking away, not by paying of   Washington Times

The States Take On Foreclosures NYT (Nocera)

Australians swoop in on U.S. foreclosures CNN
 

14- CORPORATE BANKRUPTCIES

17- CHINA BUBBLE

China PMI jumps as rest of Asia slows  FT

China’s manufacturers sharply increased output in October, powered largely by rising domestic demand and defying a widespread slowdown in the rest of Asia. The official purchasing managers' index released by the China Federation of Logistics and Purchasing rose to 54.7 from 53.8 in September, indicating strong growth in spite of Beijing’s efforts to slow the economy to avoid asset bubbles. HSBC said the rate of expansion in new business for Chinese manufacturing companies was at a six-month high, in spite of a relatively small increase in export orders, suggesting that growth was firmly centred on the domestic market. The industrial slowdown in Asia outside China suggests that economic growth is decelerating from the very high rates of expansion achieved after the global crisis.   ASIA Gross domestic product for the region excluding Japan soared by 9 per cent between April 2009 and June this year, largely on the back of a 25 per cent rise in industrial production over the same period. That reflected an increase in domestic consumption that more than compensated for a fall in exports to the western advanced economies. The first clear sign that Asia’s overall economic growth may be slowing came in Singapore in October, where preliminary GDP figures for the third quarter showed a contraction of 19.8 per cent, quarter on quarter, seasonally adjusted, which was much bigger than consensus forecasts. That compared with growth of 24 per cent on the same basis in the second quarter, and 45.7 per cent in the first. Wealthy Singapore is often a bellwether for Asia. It was the first Asian country to move into recession when the crisis hit home in 2008, and the first to start growing again a year ago. Calculations by Credit Suisse, the investment bank, suggest that industrial production growth in Asia excluding Japan and China may fall as low as 3.5 per cent by January, compared with a long-term average of 6.1 per cent. Underlying the production slowdown is a steady decline in PMI indices, which track a range of indicators such as business confidence, prices and new orders. Leading indicators from Singapore and Australia indicate a contraction in October, with even fast-growing India expected to report a deceleration. In spite of the manufacturing slowdown in many countries, no one is predicting a return to recession. The Asian Development Bank has upgraded its 2010 GDP growth forecast for Asia excluding Japan to 8.2 per cent from 7.5 per cent, with growth of 7.3 per cent in 2011.

Swiss watch industry rides China wave MW

19- PUBLIC POLICY MISCUES19- PUBLIC POLICY MISCUES

Vote Hints at Historic Political Volatility  WSJ

The U.S. could be caught in a cycle of political volatility witnessed only four times in the past century, almost all during war or economic unease.

Scott Rasmussen- A Vote Against Dems, Not for the GOP  WSJ

Concentrated Wealth and the Purchase of Political Power: Democracy's Death Spiral Smith

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