Frontrunning: November 10

• G-20 Unity Born in Crisis Fractures as Leaders Pursue Own Ends (Bloomberg)
• IMF Calls on UK to Plan for Surprises (FT)
• Rare earth prices to rise again? (Reuters)
• Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire (Bloomberg)
• Food Price Fears As US Warns On Crop Yields (FT)
• EU threatens to block Chinese bids for public contracts (Telegraph)
• Fed-Bashing Three Ways: Beating up on the Fed used to make you an oddball. Does it still? (Slate)
• Debt Limit Impasse Could Drag On For Months (RCM)
• China Said to Order Some Banks to Raise Reserve Ratio by 50 Basis Points (Bloomberg)
• Ireland's Fate Tied to Doomed Banks (WSJ)
• Republicans eye reviving tax cut debate in 2012 (Reuters)
• Goldman's O'Neill Says China, U.S. in `Grand Bargain' on Yuan (Bloomberg)
• Fed Decision Clouds Seoul Debate (WaPo)
• Iran says won't discuss nuclear issue with big six (Reuters)
• Michael Pettis: QE2 and the Titanic (MPettis)
• S. Korea Ruling Party to Seek Tax on Foreigners' Bond Holdings (Bloomberg)
• GM posts $2 billion profit as production picks up (Reuters), in other news, please put your hand up if you have ever considered buying an American car
• Goldman now does Op-Eds: Eurozone bond haircuts must look appealing (FT)
• Someone actually defends QE2: Martin Wold of the FT speaks out on why the fed is right to turn on the tap (FT)

Economic data

• Germany Wholesale Price Index for October -0.3%m/m 7.7%y/y.Previous 1.0% m/m 7.6% y/y.
• France CPI - EU Harmonised for October 0.1%m/m 1.8%y/y – in line with expectations.Consensus 0.2% m/m 1.8% y/y. Previous 0.0% m/m 1.8% y/y.
• France Consumer Price Index for October 0.1% m/m 1.6% y/y – in line with expectations. Consensus 0.1% m/m 1.6% y/y. Previous -0.1% m/m 1.6% y/y.
• France CPI Ex Tobacco Index for October 120.04 – in line with expectations.Consensus 120.03. Previous 119.9.
• France Industrial Production for September 0.1%m/m 5.1%y/y - lower than expected.Consensus 0.5% m/m 4.7% y/y. Previous 0.0% m/m 3.2% y/y.
• France Manufacturing Production for September -0.1%m/m 4.9%y/y - lower than expected.Consensus 0.6% m/m 5.1% y/y. Previous 0.0% m/m 3.2% y/y.
• Italy Industrial Production sa for September -2.1%m/m 4.1%y/y - lower than expected.Consensus -0.3% m/m 7.6% y/y. Previous 1.6% m/m 9.7% y/y.
• Italy Industrial Production nsa for September 4.1% y/y.Previous 12.8%y/y.
• Norway CPI for October 0.1%m/m 2.0%y/y - lower than expected. Consensus 0.2% m/m 2.2% y/y. Previous 0.6% m/m 1.7% y/y.
• Norway Producer Prices incl.Oil for October 0.0%m/m 18.0%y/y - lower than expected.Consensus 0.1% m/m. Previous -0.3% m/m 19.7% y/y.
• Sweden Industrial Prod. s.a. for September 2.7%m/m 10.5% y/y - higher than expected.Consensus 2.1% m/m 11.0% y/y. Previous -4.0% m/m 9.7% y/y.
• Sweden Industrial Orders s.a. for September 5.6%m/m 13.7%y/y. Previous -5.9%m/m 12.6%y/y.

Comments

[hugolp]

G-20 Unity Born in Crisis Fractures as Leaders Pursue Own Ends

The G20 is not united, but the G19 is united against the USA.

[snowball777]

So will those advocating default actually filibuster the debt-ceiling raise (and be held responsible for the ensuing chaos) or disappoint their 'base' (choose whatever definition of 'base' makes sense for your political affiliation) and eat their words?

I'm guessing the latter since they won't be held accountable by the astroturf base that got them into office anyway.

[unum mountaineer]

latter, voting public at large has no concept of tis dynamic..its something easily side stepped with taxes debate and gay rights imvho

[Spalding_Smailes]

Great stuff ...

Each major country (and many minor) is pursuing monetary policies that attempt to create domestic growth at the expense of their neighbors.  One of the terrible consequences of trade and currency war is that every country eventually gets caught up in the process and must play the same brutal game or suffer the consequences.  No one paid much attention to beggar-thy-neighbor polices when the world was growing quickly, but it should have come as a surprise to no one that once global demand growth slowed, it was going to create a huge problem for international trade.

I hate to sound like a broken record, but since China and the US have seemingly valid and actually quite similar reasons for insisting on policies that are mutually contradictory, and neither can force the other except by accelerating their incompatible currency policies, there is almost no possibility of a happy solution to the trade disputes.  In fact before the G20 meetings have even started, bad tempers and frayed nerves seem to provide some ominous signs.  Here is what an article in Wednesday’s South China Morning Post said:

An all-day G20 planning session grew so intense that officials had to leave the door open to keep the room from overheating, underscoring deep tensions over global economic rebalancing one day before the start of a summit.

Deputies drafting a final statement to be released after the Group of 20 summit concludes on Friday remained far apart on pivotal issues, including currency exchange rates, G20 spokesman Kim Yoon Kyung said on Wednesday.  “We had to open the door because the debate was so animated and the room was getting hot,” he said.

I think there is a very good chance that in retrospect QE2 will be seen as the equivalent of the Plaza Accord.  If the US continues to pursue quantitative easing, it could spell the last stage of China’s great growth spurt followed by the beginning of the big adjustment.  And like the Plaza Accord it will sow many years of suspicion and conspiracy theories.

Michael Pettis: QE2 and the Titanic (MPettis)

[plongka10]

Quite an eyeopener to see that state governments and not for profit entities have handed over 4 billion to the banks to get out of swap agreements. I wonder what the amount is OUS?

[RockyRacoon]

I agree.  The article should attain the status of a main ZH article:

Wall Street Collects $4 Billion From Taxpayers as Swaps Backfire (Bloomberg)

What if States and municipalities just said, "We ain't paying!".

What then?  Would Wall Street sue and suffer the stink of the equivalent of rape?

[spekulatn]

“There’s just no reason these entities should be playing with this stuff,” said Christopher Whalen, managing director at the Torrance, California-based research firm Institutional Risk Analytics. “They don’t have the capacity to evaluate these instruments. They are totally lost.”

Nuff said.