World Bank

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Frontrunning: January 25





  • Angela Merkel casts doubt on saving Greece from financial meltdown (Guardian)
  • Germany Rejects ‘Indecent’ Call to ECB on Greece, Meister Says (Bloomberg)
  • Obama Calls for Higher Taxes on Wealthy (Bloomberg)
  • Fed set to push back timing of eventual rate hike (Reuters)
  • Recession Looms As UK Economy Shrinks By 0.2%, more than expected (SKY)
  • King Says BOE Can Increase Bond Purchases If Needed to Meet Inflation Goal (Bloomberg)
  • When One Quadrillion Yen is not enough: Japan's first trade deficit since 1980 raises debt doubts (Reuters)
  • Sarkozy to quit if he loses poll (FT)
  • U.S. Shifts Policy on Nuclear Pacts (WSJ)
  • ECB under pressure over Greek bond hit (FT)
 
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IMF Cuts Global Forecast, Sees European Recession, Warns Of 4% Economic Crunch If No Euroarea Action





The latest IMF Global Financial Stability Report is out and it is not pretty. The IMF now sees:

  • 2012 world growth outlook cut to 3.3% from 4.0%, 2013 growth revised lower to 3.9% from 4.5%
  • 2012 US growth of 1.8%, 2013 at 2.2%
  • 2012 UK growth of 0.6%, down from 1.6%
  • 2012 China growth of 8.2%, down from 9.0%
  • Eurozone to enter "mild" recession, whatever that is, with -0.5% economic growth, to grow again in 2013 by 0.8%. Unclear just how with all the deleveraging...

IMF also adds that without action, the debt crisis may force a 4% Euro-area contraction, in line with what the World Bank, controlled by a former Goldmanite, said. Lastly, the IMF says that Europe needs a larger firewall and bank deleveraging limits. Well there is always that €X trillion February 29 LTRO.

 
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Peter Boettke Explains Austrian Economics





In this very informative interview between The Browser and Peter Boettke, the professor of economics discusses the contributions made by the Austrian School, and explains the various nuances of the economic school by way of recent books by "Austrians." He also explains what we can learn from Mises and Hayek, and argues that economics is the sexiest subject.

 
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2012 Gold Estimates Lowered By Banks - But Remain Bullish





The world's biggest primary silver miner, Fresnillo, had flat silver production in 2011. Output is only expected to remain stable in 2012.  African Barrick Gold said on Wednesday fourth quarter gold production fell 11% and missed its annual production targets. Despite price rises seen in 2011, gold and silver mining is remaining static contrary to claims by gold bears that higher prices would lead to increased production and therefore increased supply. Geological constraints may be impacting mining companies ability to increase production of the precious metals. Standard Bank has said it lowered its average 2012 gold price forecast by 6 percent to $1,780 an ounce, but continues to expect prices of the precious metal to touch new highs in the latter half of this year.  "We maintain that gold will reach new highs this year but, given our dollar view, we believe that these highs will be reached only in the second half of 2012," the analyst said in a note. Standard Bank expects the U.S. dollar to gain strength, especially against the euro, over the next quarter. A few other banks have recently lowered price forecasts for gold, including ANZ and Credit Suisse – however the majority remain bullish on gold’s outlook for 2012.

 
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Frontrunning: January 18





  • Here we go again: IMF Said to Seek $1 Trillion Resource-Boost Amid Euro Crisis (Bloomberg)
  • China said to Tell banks to Restrict Lending as Local Officials Seek Funds (Bloomberg)
  • EU to Take Legal Action Against Hungary (FT)
  • Portugal Yields Fall in Auction of Short-Term Debt (Reuters)
  • US Natural Gas Prices at 10-Year Low as Warm Weather Weakens Demand (Reuters)
  • German Yield Falls in Auction of 2-Year Bonds (Reuters)
  • World Bank Slashes Global GDP Forecasts, Outlook Grim (Reuters)
  • Why the Super-Marios Need Help (Martin Wolf) (FT)
  • Chinese Vice Premier Stresses Government Role in Improving People's Livelihoods (Xinhua)
 
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World Bank Cuts Economic Outlook, Says Europe Is In Recession, Warns Developing Economies To "Prepare For The Worst"





This will hardly be a surprise to anyone with 3 neurons to rub across their frontal lobe, but at least it is now official.

  • WORLD BANK CUTS GLOBAL GROWTH OUTLOOK, SEES EURO-AREA RECESSION

And the punchline:

  • World Bank urges developing economies to “prepare for the worst” as it sees risk for European turmoil to turn into global financial crisis reminiscent of 2008
  • Even achieving much weaker outcomes is very uncertain

Morgan Stanley may want to revise their 37% Muddle Through probability outcome, to something more like 36.745% on this news.

 
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Key Overnight Events And What To Expect





Just like during the holiday "break" the market is euphoric, however, briefly, on the fact that Italy sold Bills , however many, in a period protected by the 3 year LTRO. And just like the last time this happened, about two weeks ago, this auction shows nothing about the demand for Italian paper longer than 3 years, which unfortunately Italy not only has a lot of, but is rolling even more of it. And none of this changes what World Bank President Zoellick told Welt yesterday, namely that the Europe’s interbank market is frozen and continent’s banks only lend to each other through ECB due to a lack of confidence within the financial industry, World Bank President Robert Zoellick is quoted as saying by German daily Die Welt. He continues: "If European banks don’t lend to each other, how can others in the U.S. or in China be expected to do it." Anyway, here courtesy of Bloomberg's Daybook are the key overnight events as we prepare for the ECB 7:45 announcement and subsequent conference.

 
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Guest Post: India - Land of Energy Opportunity





Quick, what country is the economic engine that will power world growth? If you answered "China," you're far from alone. But there's another country that deserves as much attention and better yet, is much friendlier to investment: India, home to 1.2 billion people. To electrify all those houses, power the industries that keep all those people employed, and fuel the vehicles that more and more Indians own, India's energy needs are shooting skyward. First question to consider: what kind of energy does India need? Just about every kind, really. India encompasses significant reserves of coal, oil, and gas, but each year it has to import more and more to meet its rapidly rising demand. Domestic production increases have been hampered by land disputes, interminably slow permitting, and government-regulated pricing mechanisms that discourage development. That's got to change if India wants to keep up, and its government knows it. Domestic supplies always come with better reliability, better prices, and other benefits that we can shorten into two words: energy security. So India is reaching out to foreign oil majors, quietly setting up deals to exchange stakes in giant, underexplored oil and gas fields for the technical expertise it needs to best develop these resources. These partnerships are working into place slowly. However, they show Delhi is serious about the welcome mat it rolled out in 2000, when it passed a policy that allows foreign companies to own 100% of any oil and gas assets they may want to acquire for exploration and development. And what we really like is that explorers are welcome in a democratic and reasonably friendly country that harbors none of the risk of asset nationalization that clings to other underexplored locales, like Venezuela.

 
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Presenting The Exchange Stabilization Fund In 5 Parts: Is This The Real "Plunge Protection Team"?





When it comes to the fabled President's Working Group on Capital Markets, also known as the Plunge Protection Team, the myths about the subject are certainly far greater than any underlying reality. To be sure, vast amounts of popular folkflore has been expounded into the public arena, with most of it being shot down simply due to it assuming conspiracy theories of such vast scale that the human mind is unable to grasp the complexity, and ultimately the inverse Gordian Knot makes an appearance with the claim that vast conspiracies are largely untenable simply because it is impossible to keep a secret from so many people for so long. Yet what if the secret is not a secret at all but is fully out in the open, and is only a matter of interpretation, and contextualizing? Why just 3 years ago it would appear preposterous to allege the capital markets are a ponzi and that the Fed does everything in its power to keep stocks higher. Well, what a difference three years make: now the Chairman himself in a Washington Post OpEd has admitted that the sole gauge of Fed success is the loftiness of the Russell 2000, neither unemployment nor inflation really matter now that the Fed's third mandate has been fully whipped out. Furthermore, Keynesian economics, and the entire top echelon of the educational system have also been accurately represented as a paradigm which merely perpetuates the status quo as the alternative is the realization that the whole system is a house of cards. As for the global capital markets being nothing short of a ponzi, we merely point you to the general direction of Europe, the ECB and the continent's banks, where the monetary interplay is nothing short of the world's biggest pyramid scheme. Yet the PPT, or whatever it is informally called, does not exist? Consider further that only recently did it become known that the former SecTres Hank Paulson himself was exposed as presenting material non-public information to a bevy of Goldman arb desk diaspora hedge funds, headed by with none other than the head of the President's Working Group on Capital Markets Asset Managers committee David Mindich. So, if contrary to all the evidence that there is some vast underlying pattern, if not a conspiracy per se, one were to take the leap of faith and take the next step, where would one end up? Well, most likely looking at the Exchange Stabilization Fund, or ESF, which Eric deCarbonnel has spent so much time trying to unmask. Is it possible that the ESF, located conveniently at the nexus between US monetary policy, foreign policy and last but not least, a promoter of the interests of the US military-industrial complex, is precisely the  organization that so many have been trying to expose for years? Watch and decide for yourself.

 
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Hillary Clinton Seeks To Run World Bank





Update 2: State Department official says Clinton would not even take World Bank job if it was offered - CBS News

Update: NBC WIRE: From Philippe Reines, a Clinton spokeman: "It's 100% untrue, Reuters is wrong. That's on the record."

Phew, that was scary...

We are surprised that the "recidivist rapist" post-DSK PR backlash took so long. Yet it is now here. From Reuters:

  • Secretary of State Hillary Clinton has been in discussions with the
    White House about leaving her job next year to become head of the World
    Bank, sources familiar with the discussions said Thursday.

Far more importantly, another rat leaves Obama's sinking ship. In the meantime, feminists everywhere rejoice, because, you know, Hillary, extremely experienced in economic, bankruptcy, and other financial issues is a woman.  Next up: Oprah seeks to run the Bilderberg group, in order to give it a more "streamlined", humane appearance and Rachel Maddow in rumored to run the Trilateral Commission. Obviously, Erin Burnett is a shoo in for the CFR. And yes, the world has now officially gone crazy.

 
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World Bank Sees Dollar Reserve Status Ending Over Next Decade





In a report released yesterday titled "Multipolarity: The New Global Economy", that other "bailout" organization, the World Bank, says that due to the developing world's pronounced greater growth curve through 2025 (expected to grow at 4.7% compared to 2.3% for the developed countries), the outcome will be that "The balance of global growth and investment will shift to developing or emerging economies." More importantly, as the FT summarized, a "different international monetary system will gradually evolve, wiping out the US dollar’s position as the world’s main reserve currency." As a result of these "inevitabilities" (which will be interested to see how they are attained considering according to a recent report, the world will need to double its debt to double it GDP, so where all this new debt will come from we don't really know), there are three potential scenarios: i) A status quo centered on the US dollar, ii) A system with the Special Drawing Rights (SDR) as the main international currency, iii) A multicurrency system. And while this obviously covers every possible outcome so absolutely no value added there, the WB is focused on outcome iii and believes that the dollar will gradually shift away from its current position of reserve currency prominence. This is not surprising: after all it is none other than World Bank president Robert Zoellick who recently predicted a return to the gold standard and an end to USD hegemony. Our advice to Bob: stay away from penthouse suites at the Sofitel.

 
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Excerpts From Executive Statements At The IMF/World Bank Meeting





Today has been a busy day for central planners around the world: the IMF and the World Bank are holding their spring meetings which has resulted in an avalanche of Bloomberg excerpts. Courtesy of Reuters, here is a full summary of the key statements by various high level officials. As usual anything that is being denied is about to hit us head on. Of particular note are the statements by TeflonTurboTaxTim Geithner.

 
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Watch World Bank President Robert Zoellick Discuss The Future Of The Monetary System Live





World Bank president Robert Zoellick is currently speaking live on Reuters Newsmaker, and is discussing numerous topics related to the future of the monetary system, notable among them most likely being the fate of the dollar, and whether or not he still stand behind his recent statement that a return to the gold standard is needed for the world.

 
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