News That Matters

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Japan is discussing with China possible purchases of Chinese government bonds, Bloomberg reports. Japanese finance minister Jun Azumi said “I think it’s mutually beneficial” for the two countries to be investing in one another’s debt,
Investors have dumped Bank of America, driving its share price to a near three-year low of $4.99 and raising fresh worries over the state of the second-largest US bank by assets, reports the FT. The bank’s shares are trading at about 38 per cent of tangible book value,
RBS and Blackstone are set to complete a deal in which the bank will hand over control of £1.4bn of distressed property loans to the US private equity group, reports the FT, citing people involved. The move to offload the loans into a Blackstone-managed fund was likely to be completed Monday night.
Wall Street is closing near its low for the day amid what has been cautious trading after reports of further divisions over eurozone rescue funds and geopolitical tension in the wake of Kim Jong-il’s death,
Dominique Strauss-Kahn, the former head of the International Monetary Fund, made a defiant return to public life on Monday, warning European leaders that they were in denial about the Continent’s economic crisis and have only weeks to come up with real solutions,
The European Central Bank has warned the eurozone debt crisis could spread to engulf further member states, creating risks to financial stability that could reverberate around the world “Contagion of euro area sovereign debt strains remains the most pressing risk for financial stability in the euro area,
The death of Kim Jong-il threw the Korean peninsula into fresh uncertainty on Monday as the North Korean regime named the dictator’s youngest son as the “Great Successor”, rattling financial markets in the south,
Most Asian stock markets were modestly higher Tuesday amid scattered deal-making and receding worries the death of North Korean leader Kim Jong Il might spur instability on the Korean Peninsula, but Europe’s continuing debt crisis tempered gains. Japan’s Nikkei Stock Average tacked on 0.5% and Australia’s S&P/ASX 200 was flat. Hong Kong’s Hang Seng Index added 0.5%, while China’s Shanghai Composite edged up 0.2%. Dow Jones Industrial Average futures were 49 points higher in screen trade.
Euro-zone finance ministers on Monday confirmed plans to contribute €150 billion ($195.6 billion) in additional bilateral loans to the International Monetary Fund as part of a move to boost its resources for crisis response, but contributions from other European Union members remained unclear as the U.K. held its ground that any additional IMF funds should be part of a global agreement. In a statement following a conference call among EU finance ministers, Eurogroup President Jean-Claude Juncker said the U.K. indicated it will define its contribution early next year in the framework of the Group of 20 industrialized and developing nations.
Governments in Europe are tying themselves in knots to prop up their banks, desperate to blunt the cost and embarrassment of a fresh wave of taxpayer-funded bailouts. In Italy, for example, the government is encouraging banks to buy public properties that the banks then can use to borrow money. As part of a broader deficit-reduction program in Portugal, the government essentially is borrowing money from bank pension funds and could use some of the funds to help state-owned companies repay bank loans.
Apple Inc. was handed a legal victory that is bad news for rival Google Inc., as a U.S. trade agency ruled that some HTC Corp. smartphones that use the Internet company’s Android software infringe an Apple patent. The U.S. International Trade Commission on Monday ordered HTC by April to stop importing handsets that infringe the patent. The Taiwanese company said it would remove the feature found to violate Apple’s patent, a move that should avoid disruption to its U.S. business.
The South Korean government on Tuesday said it will actively participate in Group of 20 talks on expanding the International Monetary Fund’s resources to deal with the euro-zone debt crisis. The government, in a statement, said it will also seek a G-20 level plan to minimize the effects of excessive deleveraging and capital flows to protect the domestic economy.  Korea will also seek progress on discussions about strengthening various financial safety nets to respond to systemic risks, such as closer cooperation between the IMF and regional financial safety nets and stronger cooperation among central banks
2012 is shaping up to be the year of the dove on the Federal Reserve’s interest-rate setting committee, giving Fed Chairman Ben Bernanke leeway to continue his activist approach to monetary policy if he so chooses, analysts said. “I have always thought that the chairman could get whatever he wanted but it is going to be even more overwhelmingly so next year,” said Joseph Gagnon, a former Fed staffer and now an analyst with the Peterson Institute for International Economics.  While it is a “close call,” Gagnon said he thinks the new committee will vote in favor of another round of asset purchases, or quantitative easing, early next year.
Brent crude futures rose above $104 on Tuesday, buoyed by the risk of supply being disrupted from Central Asian oil producer Kazakhstan, even as sanctions-hit Iran struggles to maintain its production and Libyan output is delayed. Brent crude rose 56 cents to $104.20 a barrel by 11:34 p.m. EST, posting the biggest gain in a week. U.S. crude was up 37 cents at $94.25 a barrel, after rising as high as $94.58 earlier in the day.
When Defense Secretary Leon Panetta visited U.S. troops in South Korea in October and told them that they were on “the front line,” it was clearly a rhetorical flourish meant to show appreciation for the 28,500 American forces theoretically in firing range of the North. But less than two months later, North Korean leader Kim Jong-il’s death has raised the possibility of true instability on the Korean peninsula. And rather than speaking with colorful bravado, U.S. officials have been at pains to avoid doing or saying anything that could escalate tensions or create the perception of looming conflict.
Japan plans to bolster its intervention war chest to an unprecedented amount, a sign of the government’s vigilance against a yen near postwar highs against the U.S. dollar. The Finance Ministry plans to raise the issuance limit for bills to fund currency intervention to 195 trillion yen ($2.5 trillion), the first increase since Sept. 30, according to government documents released in Tokyo today. More than 65 trillion yen will be available for additional intervention, according to the ministry.
Zhu Lei, a property agent for the Serenity Coast luxury residential and hotel complex in Sanya on China’s Hainan island, recalls clients carrying suitcases of cash to shop for holiday apartments last year. “We didn’t even have time for toilet breaks because there were just too many clients,” Zhu said. Today, sales in the second-biggest city on the tropical island compared to Hawaii for its sandy beaches and weather, are “bleak,” he said.
Australia’s central bank said resource investment is helping the economy ride out Europe’s sovereign-debt crisis, sending the local currency higher as traders reduced bets on the scale of future interest-rate cuts. The Reserve Bank of Australia lowered borrowing costs Dec. 6 because of the “non-trivial possibility of a very sharp contraction” in Europe, according to minutes of the meeting released today. Policy makers had seen no “strong need” to reduce rates based on the domestic outlook, they showed.
India may jump into an escalating U.S.-China trade fight over solar energy as local manufacturers lobby New Delhi for protection against imports from rivals including First Solar Inc. (FSLR) and Suntech Power Holdings Co. (STP) . India may initiate an anti-dumping probe in a month focused on imports of Chinese solar products, China’s Commerce Ministry said in a statement yesterday. India’s Commerce Secretary Rahul Khullar declined to comment in a phone call.
Spain’s incoming conservative Prime Minister, Mariano Rajoy, has promised deep public spending cuts while offering tax breaks for companies. He told the Spanish parliament he aimed to cut the budget deficit by 16.5bn euros (£14bn; $21.6bn) next year. He said his Popular Party (PP) government would make more companies eligible for low corporate tax rates. Last month the PP won elections by a wide margin, ousting the Socialist Party amid deep economic gloom.
The president of the European Central Bank (ECB), Mario Draghi, has said he has “no doubts” about the euro’s ability to survive the current crisis. Speaking to the European Parliament’s Committee on Economic and Monetary Affairs, he was asked about a Financial Times interview in which he warned of the costs of a eurozone break-up. But he said he believed in the currency’s “permanence”.  Meanwhile, the ECB warned that risks to the eurozone’s stability had increased.
IMF head Christine Lagarde, who is visiting Africa, has praised Nigerian President Goodluck Jonathan’s efforts to transform his country’s economy. Ms Largarde held talks with the president after meeting the country’s finance minister, Ngozi Okonjo-Iweala, earlier on Monday. She is expected to focus on the fallout from the eurozone debt crisis and youth unemployment during her visit. Ms Largarde is visiting Africa for the first time as head of the IMF.
Protracted indecision among political leaders has created a “cycle of risk” with “systemic crisis proportions not witnessed since the collapse of Lehman Brothers”, the European Central Bank (ECB) has warned. In a hard hitting Financial Stability Review, the ECB said the “risks to euro area financial stability increased considerably in the second half of 2011?. It said “positive market responses” to European summit agreements had been “short-lived – indeed, a bumpy ratification process appears to have contributed to additional market uncertainties.”
M&A activity will rise in 2012 as UK businesses get an appetite for overseas acquisitions. The number of firms looking to buy or merge with an overseas competitor has more than doubled since the start of the year according to research from Royal Bank of Scotland.  Meanwhile more than half of mid- to large-sized UK companies are now actively considering acquiring a smaller business next year, up from a third earlier this year.
The Reserve Bank of Australia says it expects global economic growth to stall in the coming year, keeping the door open for more cash rate cuts in 2012. The RBA elected to cut the cash rate by 25 basis points – to 4.25 per cent – at its December board meeting, citing economic instability in the eurozone and moderating inflation for its decision. It was the second cut in a row for the RBA, after it had left rates on hold for a whole year.
Australian banks still have access to credit lines, however stresses in European money markets have made it tougher for the sector to secure crucial long-term funding, the Reserve Bank said. Several Australian bank executives have said offshore funding markets were effectively shut since mid-November, as debt investors sweated over the health of Europe’s banking sector. This credit squeeze may force up the cost of credit to business and consumers, local banks including Westpac and ANZ have warned recently.
Spot gold struggled to breach $US1,600 an ounce on Tuesday, as investors remained nervous over the progress of a solution to the euro zone debt crisis, while a firmer US dollar may cap gains in bullion. Spot gold edged up 0.2 per cent to $US1596.65 an ounce, after piercing above $US1600 briefly earlier in the day. US gold inched up 0.1 per cent to $US1599.
China’s second largest oil field, Shengli Oilfield, is aiming at increasing its crude oil output to 27.5 million tonnes in 2012, 160,000 tonnes more than the 2011 target. As the flagship oil producing unit of China’s state-owned petroleum giant Sinopec, Shengli Oilfield has fulfilled its 2011 plan of 27.34 million tonnes of oil production so far, trailing only behind PetroChina’s Daqing Oilfield in output. Located in the Yellow River delta bordering Bohai Sea, the Shengli Oil field was discovered in 1961, and its development began in 1964, with daily production of approximately 650,000 barrels.
Hong Kong’s unemployment rate increased from 3.3 percent in August-October to 3.4 percent in September-November while the underemployment rate fell from 1.6 percent to 1.5 percent, the authority said on Monday. According to the news released by the Census & Statistics Department, increases in the unemployment rate were mainly observed in the foundation and superstructure, and warehousing and support activities for transportation sectors. As for underemployment, decreases were mainly seen in the decoration, repair and maintenance for buildings as well as the food and beverage service activities sector.
South Korean firms’ profitability weakened in the third quarter due to an increase in production costs caused by a rise in global raw material prices, the central bank said Tuesday. Average ratio of operating profit at 1,420 firms listed on the local bourse and 102 major unlisted companies reached 5.3 percent of their sales during the July-September period, down from 5.5 percent tallied in the second quarter, according to the Bank of Korea (BOK). That reading means companies earned an average of 5.3 won in operating profit per every 100 won in sales during the quarter. Operating profit refers to sales minus cost of goods sold and sales & administrative expenses.
As the market anticipates more capital easing, some experts predict that Chinese banks may expand new loan scale in 2012 and it may even exceed 8 trillion. Parts of the new loan would use to support the construction of social security housing and other local low-rent housing projects. The People’s Bank of China (PBOC), the country’s central bank, said last Wednesday that China would continue the prudent monetary policy next year while making the policy more targeted, flexible and forward-looking. PBOC will improve credit structure, increase support to key sectors and weak areas, especially to agriculture, small and medium-sized enterprises and affordable housing construction, as well as better serve the real economy.
China’s centrally administered state-owned enterprises (SOEs) reported net profits of 831.79 billion yuan (131.4 billion U.S. dollars) during the first 11 months of 2011, up 3.6 percent year-on-year, the country’s SOE regulator said Monday.  The posted growth represented a sharp decrease from the 50.1-percent increase recorded during the corresponding period of 2010. Only 69.5 percent of China’s central SOEs posted year-on-year profit increases during the first 11 months of the year, said Wang Yong, director of the State-owned Assets Supervision and Administration Commission. Revenues for central SOEs climbed 22.6 percent year-on-year to reach 18.4 trillion yuan during the January-November period, a slower growth rate than the 34.7-percent surge reported during the same period last year, Wang said.
The economic crisis in the US has not resulted in a slowdown in Indian exports, and Indian businesses in the U.S. continue to add value and create jobs during what is a difficult period for America, Nirupama Rao, Indian Ambassador to the U.S. said on Monday.  Addressing journalists after a business interactive meeting hosted by the Federation of Indian Chambers of Commerce and Industry (FICCI), she said Indian companies spread over 43 States in the U.S. were creating jobs during the economic downturn and were key to the recovery of the US economy.  There was also no contraction in demand for Indian goods in the US and Indian exports were likely to cross $ 54 billion this year as against $ 43 billion the previous year. 
Apparel exporters have failed to turn the rupee’s slump into big orders largely because western retailers have cut orders for the ‘Spring Summer 2012' season on fears of a slump in demand after the Christmas season. More than 80% of India’ s $11-billion apparel business depends on the US and European markets where consumers are currently not spending much on clothes, thanks to the crisis in Europe.
South Korea’s economy will likely grow 3.4 percent in 2012, down from 3.8 percent growth projected for this year, as global economic uncertainties affect exports, a private think tank said Tuesday. In its outlook for next year, LG Economic Research Institute (LGERI) said sluggish growth in industrialized economies is expected to hurt demand for durable goods and related parts. Such developments can directly impact the country’s outbound shipments. The institute said there may be some improvements in domestic consumption, but not enough to make up for losses from weak exports.
South Korea will map out its action plans on a free trade agreement (FTA) with China and Japan before the heads of state from the three Northeast Asian countries meet in May, the finance ministry said Tuesday. “Based on consultations with China and Japan and the results of the joint study (which was recently completed), we will prepare our action plans before the summit talks,” the finance ministry said in a press release. Detailed timetables, a negotiation road map and other preparations will be included in the action plans, a ministry official noted.
China’s automobile prices declined slightly in November from the previous month largely due to increasing inventories, government data showed Tuesday. The average price of vehicles manufactured by domestic makers dropped 0.16 percent on-month and 1.19 percent on-year in November, according to the data released by the country’s planning ministry, the National Development and Reform Commission. Passenger cars led the overall drop as their prices fell 0.49 percent on-month and 1.88 percent on-year.
Imported automobiles also saw prices decline, shedding 0.05 percent on-month and 1.29 percent on-year.
Occupy Wall Street, the 1%, Arab Spring, M15 in Spain. All signs of frustration in the society. Inequality, where the rich get richer, while the poor get poorer. Whatever one thinks of inequality, it has been around for a long time, and will probably continue to do so. While growing stronger, it risks taking down a society or two. Some calculus on the inequality aspects of our society. By World Complex;  The question of wealth inequality has been making headlines, in everything from the Occupy Wall Street movement and their decrying the wealth of the 1%, to discussion in the Republican Presidential-Candidate Popularity Contest currently ongoing in the US.

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metastar's picture

You scratch my bank and I'll scratch yours.

PulauHantu29's picture

Gagnon said he thinks the new committee will vote in favor of another round of asset purchases, or quantitative easing, early next year.

Be prepared. It's no wonder oil, etc are soaring higher today.

A Lunatic's picture

This seems extraordinarily important. (will Iowa ignore a Ron Paul win?)