News That Matters

Yesterday’s early bank bail out euphoria is gone. Investors realized quickly that the bail doesn’t solve the problems, especially not the Italian problems. Yields in both countries reversed, and are trading at “scary” levels yet again. The contagion is spreading. With the big underperformance of the MIB index, investors are now slowly shifting focus towards Italy, and don’t be surprised if Silvio Berlusconi comes back sooner than later.
Spain’s borrowing costs hit a euro-era high on Tuesday amid sagging investor confidence that Europe can prevent its debt crisis from worsening and wrangling among policy makers over how to implement cross-border banking supervision. The yield on Spanish benchmark 10-year debt hit 6.8 per cent just days after eurozone finance ministers agreed a €100bn bailout package for the country’s banks. The move was accompanied by rising bond yields in countries deemed less risky, such as Germany and the UK, where market interest rates have been at record lows.

Greece returns to the polls on Sunday in another attempt to elect a viable government, and the outcome of the election remains highly uncertain. Despite the broad-based support for euro membership among all major Greek parties and the general public, S&P is of the view that there is at least a one-in-three chance that Greece will exit. A Greek exit could be brought about almost by accident. A Syriza-led government that fundamentally rejects the reforms agreed with the “troika” the International Monetary Fund, European Commission and European Central Bank could lead to a suspension of external financial support.

Hillary Clinton accused Russia of sending attack helicopters to Syria in a move that could “dramatically” escalate the conflict, as a senior UN official claimed the country was already in a “civil war”. In some of the toughest language the US has used about Russia’s support for the regime of Bashar al-Assad, the US secretary of state said Moscow’s claims that its arms transfers to Syria were having no impact on the conflict were “patently untrue”.


A year ago, Opec delegates held what Ali Naimi, the veteran Saudi oil minister, described as “one of the worst meetings we have ever had”. The signs are that the one scheduled to take place on Thursday could be almost as bad. The June 2011 meeting ended in disarray with no formal agreement on output targets. That came after five member countries blocked a proposal by Saudi Arabia to offset the loss of Libyan oil by increasing production. The contours of a similar clash are now emerging. A group of Gulf Arab states, led by Saudi Arabia, has proposed raising Opec’s production ceiling by 500,000 barrels a day. Other member states, particularly Iran, which is already accusing Saudi Arabia of producing too much oil, instead want Opec to adhere more rigorously to the existing target of 30m b/d.

Borrowing costs for Germany, the UK and France, deemed among the safest sovereigns in Europe, rose sharply on Tuesday as investors took fright at the worsening crisis in Spain.  Yields on Spain’s government bonds soared to their highest level since the launch of the euro. The yield on benchmark 10-year debt increased to more than 6.8 per cent. However, it was the climb in borrowing costs of the “core” sovereigns, which typically tended to move in the opposite direction of the periphery’s bond yields, that unnerved many investors.
Tens of thousands of Russians marched in Moscow to demand that President Vladimir Putin step down, defying a crackdown on opposition leaders a day earlier and heavy new fines for violations at protests. Police reported no detentions at the march Thursday or the rally and concert that followed, a marked departure from protests last month that saw skirmishes with riot police and hundreds of protesters detained.

In his first trip to Capitol Hill since J.P. Morgan Chase & Co. disclosed that trading blunders have cost it at least $2 billion, Chief Executive Officer James Dimon is expected to blame a combination of overconfidence, poor judgment and faulty risk controls. Mr. Dimon, scheduled to appear before the Senate Banking Committee on Wednesday morning, intends to apologize for the miscuesa stark departure from his normal shoot-from-the-hip demeanor. But Mr. Dimon will push back on any implication that the incident is lastingly detrimental to the largest U.S. bank by assets. In fact, the New York company expects its second

The French government is in the process of revising its growth forecasts for next year after a weak start to 2012, underscoring the challenges for President François Hollande as he seeks to control debt and deficit levels while delivering on a promise to foster growth domestically and in Europe.  “We are in the process of adjusting the forecasts for next year,” Finance Minister Pierre Moscovici said on French radio station Europe 1. He referred to a Bank of France survey last week that showed the French economy is expected to contract in the second quarter for the first time since 2009.
Japan’s core machinery orders, widely followed as a leading indicator of capital spending in the country, swung back to a gain in April, rising 5.7% during the month, the Cabinet Office reported Wednesday. The result widely surpassed a 1.5% forecast rise from a Dow Jones Newswires survey of economists. Core machinery orders, which strip out volatile purchases for power utilities’ equipment and ships, fell 2.8% in March. The Japanese yen edged higher after the data, with the dollar slipping to ¥79.55 from ¥79.58 just ahead of the numbers.

German Chancellor Angela Merkel said on Tuesday that the debt crisis in Spain was a result of “the Spanish property bubble of the last 10 years” and not simply about macroeconomic factors, according to a Reuters report. “It was right for Spain to ask for help recapitalizing its banks,” Merkel said. The European banking Authority, she added, had failed to properly diagnose the problems of the Spanish banks, according to the Reuters report. Reuters reported that Merkel once again dismissed calls for jointly-issued euro-zone bonds. Bond yields on 10-year Spanish government debt breached euro-era highs on Tuesday.
Barack Obama stoutly defended his economic record on Tuesday after a stream of bad news – and an uncharacteristic verbal misstep of his own – rallied Republican hopes that they can defeat him in November. Acknowledging there is still a “long way to go” to repair the damage done by a recession he inherited, Obama insisted the American economy was on the right track despite recent signals that the country’s recovery might be fading. “What we have been able to do over the last 3-1/2 years, after a decade in which we had been moving in the wrong direction, is to begin to point towards a trajectory where here in this country, everybody is getting a fair shot,” he told supporters at the first of a string of fundraising events.

Brent crude fell 86 cents to settle at $97.14 a barrel, its fourth straight lower close and the lowest settlement since January 2011. But Brent’s intraday low of $96.62 left the 2012 low of $95.63 from June 4 intact. Brent saw heavy trading, with total volume more than 1 million lots traded, most since a record 1.22 million lots traded on June 23, 2011, and 83 percent above the 30-day average. Brent’s volume was nearly doubled the U.S. turnover.

Spot gold was little changed at $1,608.39 an ounce by 0259 GMT, after rising 0.8 percent in the previous session. U.S. gold futures contract for August delivery edged down 0.3 percent to $1,609.70. The euro, which has been a major influence on gold prices in recent months, was stuck in a range as investors shied away from the market ahead of an Italian bond sale on Thursday and Greece’s weekend election. The price rise towards $1,620 overnight attracted some scrap selling from Asia, but the flow has slowed as prices ease, dealers said.

Italian Prime Minister Mario Monti met the leaders of the parties backing him in parliament on Tuesday and called on them to give their unified support to help Italy through current market turmoil. Monti said in a statement he was “worried by the situation of emergency” on financial markets, and had told the party chiefs that “cohesion” was needed “to overcome the critical situation and give an image of unity abroad”.
The World Bank may issue yuan- denominated bonds in Hong Kong again when borrowing costs become more favorable, according to Michael Bennett, its head of derivatives and structured finance. International Finance Corp., a member of the World Bank Group, sold 150 million yuan ($23.5 million) of five-year Dim Sum bonds with a 1.8 percent coupon in January 2011, according to data compiled by Bloomberg. The debt yielded 2.35 percent yesterday. The average yield on yuan bonds in Hong Kong climbed 50 basis points to 5.53 percent this quarter, according to an index by Bank of China Ltd. “In principle, we are very open to selling more Dim Sum,” Bennett, who is based in Washington D.C., said in an interview in Hong Kong. “For us, because we are a U.S. dollar-based institution, our ability to issue in any currency is probably dependent on after-swap costs in U.S. dollars. The opportunity comes and goes based on that level.”

Erik Lueth, a Hong Kong-based senior regional economist at Royal Bank of Scotland Group Plc, comments on the city’s currency peg after former monetary chief Joseph Yam called for a review. Lueth made his comments in a research note today. “Yam’s comments are significant given his former role and the fact that he helped create and defend the peg for the better part of his professional life. “I don’t believe that the peg will be abandoned over the next seven-10 years and Yam’s intervention should be read as the views of a man who misses the limelight. “It is true that property prices and transactions are on the rise again after a short hiatus in the second half of 2011. But this is largely attributed to mainland buyers who pay cash- down and wouldn’t be deterred by higher interest rates.

Wenzhou’s more than 400,000 businesses make everything from shoes in dusty side streets to synthetic leather in dilapidated factories, much of it financed by unregulated lenders that spread during China’s record 2009-10 credit boom. The decline of so-called shadow banking in the city, triggered by Wen’s move to rein in a national property bubble, has left Wenzhou bearing the brunt of the country’s economic slowdown. China’s plans for a more targeted stimulus than the 4 trillion yuan package unveiled in 2008 ($586 billion at the time) mean Wenzhou may see little reprieve. Wen’s administration in March picked the city, five hours by train south of Shanghai, for a trial program designed to boost capital for private companies, an effort that’s failed to quell locals’ gloom.

Greek deposit outflows have accelerated before this weekend’s elections, two bankers familiar with the situation said, on concern the nation may move closer to abandoning the euro. Daily withdrawals have increased to the upper end of a 100 million-euro ($125 million) to 500 million-euro range this month, one banker said, asking not to be identified because the figures aren’t public. A second banker said the drawdown may have exceeded 700 million euros yesterday. An official for the Bank of Greece (TELL), the Athens-based central bank, declined to comment.

Bangladesh dismissed calls from the United Nations refugee agency to accept people fleeing violence that has claimed dozens of lives in neighboring Myanmar. “It is certainly not in the best of our interests to allow in a further influx of refugees,” Bangladesh Foreign Minister Dipu Moni told reporters in Dhaka yesterday, responding to reports that the UN High Commissioner for Refugees urged the country to provide a safe haven. “We want to make sure that refugees don’t enter Bangladesh in large numbers again.” Myanmar declared a state of emergency on June 10 in western Rakhine state, bordering Bangladesh, in a bid to end clashes between Buddhists and Muslim Rohingyas that erupted a week earlier. Bangladesh authorities have turned back boats carrying hundreds of Rohingyas, including
Spain and Italy need a full-scale bailout from the European Union because of their high levels of government debt and the credit quality of their banks, and will likely seek help within the next 6 months, according to Sean Egan, Founding Partner and President of Egan-Jones, an independent ratings agency.  Poor credit quality of banks usually goes hand-in-hand with poor government finances as the two institutions are “joined at the hip”, Egan told CNBC Asia’s “Squawk Box” on Wednesday. That’s the case for most countries such as the U.S., the U.K., Switzerland and Ireland; Spain and Italy are no exceptions, he said. “It makes little sense to separate the banks’ credit quality from the governments’ credit quality because quite often, they support each other and that’s certainly the case in Italy and Spain,” he said. “We think that Spain will be back at the table, asking for more than the 100 billion euros ($125 billion) that they just asked for, and we think that Italy will also come to the table within the next 6 months.”

Philipp Hildebrand, the former chairman of the Swiss National Bank, is joining BlackRock as vice-chairman and will oversee the firm’s largest institutional client relationships outside of the U.S. The move to the world’s largest money manager marks Mr Hildebrand’s active return to finance after his resignation in January as chairman of the Swiss central bank after a series of controversial currency trades by his wife.

Spanish banks which receive public loans in the form of convertible shares as part of an up to 100 billion euros financial package will be charged an interest rate of at least 8.5 percent, a European Commission spokesman said on Tuesday. Spain’s Economy Minister Luis de Guindos said on Saturday that the Spanish bank restructuring fund (FROB) would inject the European loans into banks though convertible shares, also known as Cocos, or through equity.

The World Bank on Tuesday warned that fears about the euro zone had reduced investors’ tolerance for risk, and it urged poorer economies to protect themselves by reducing their debts.  In the report, a scheduled update to the bank’s overview of the global economy, the bank forecasts sluggish growth in high-income countries, like Japan, Germany and the United States, in the coming years. It expects more modest growth in the middle-income economies that have been the engine of the global recovery, like China and Brazil. And it sees developing countries in Africa, Asia and Latin America experiencing slower growth than they have for most of the last decade. “The world is at a very difficult juncture,” said Andrew Burns, a lead author of the report, in an interview, citing fears about the stability of the euro zone, slower growth in emerging economies and pervasive market uncertainty as major factors.

Amid a White House claim that federal spending grew at the slowest rate in 60 years under President Obama, the relationship between government outlays and economic growth was being debated. Art Laffer, chairman of Laffer Associates, criticized Obama for being just as bad as his predecessor. “Frankly, he’s no different than George W. Bush. They both ruined the economy, in my mind,” he said on CNBC’s “The Kudlow Report.” “It’s not liberal or conservative, left-wing or right-wing, it’s economic policies, and spending is the problem.”  Laffer co-authored a Wall Street Journal op-ed article takingObama and Bush to task for federal spending.
China has emerged as one of the fastest-growing sources of international buyers for US real estate — in what some see as a sign that China’s rich are increasingly seeking to take their money out of the country. According to a report published by the National Association of Realtors this week, buyers from China and Hong Kong made up the second-largest group of foreign buyers of homes in the US in the 12 months to March — Canadians took first place — accounting for $9bn of sales. That is a 23 per cent increase on the $7.3bn of sales they notched up in the previous 12 months and an 88 per cent increase from $4.8bn of sales in 2010.
The U.S. government ran a budget deficit of $125 billion in May, the Treasury Department said Tuesday, pushing the deficit to $844 billion for the first eight months of fiscal 2012. In its monthly budget statement, the Treasury said the government spent $305 billion in May, 31% above the year-ago period. Receipts rose 3%, to $181 billion, the second-highest amount on record for May.
Barclays Plc Chief Executive Officer Robert Diamond said the euro region will survive even as the debt crisis slows economic growth and weakens the currency. “The underpinnings of the single currency, the underpinnings of the integrated economy across Europe are very, very strong,” Diamond said in a Bloomberg Television interview in Hong Kong today. “We’re going to continue to see some event risk as we, in our opinion, march toward, over the next couple of years, closer to fiscal and political integration.” Spain on June 9 became the fourth of the euro area’s states to ask for a rescue, while Greece’s future in the currency bloc may hinge on elections this weekend. The region’s debt crisis won’t force London-based Barclays to scrap its profitability target, Diamond said.
India’s industrial output rose by less than expected in April, adding to concerns about the health of the country’s economy. Output rose by 0.1% from a year earlier, much less than projected growth of 1.7%. It comes a day after ratings agency Standard & Poor’s warned that India may lose its investment grade status. Analysts said the weak numbers may prompt the central bank to introduce fresh measures to boost growth. “The data clearly points to industrial growth being extremely weak, and it is in clear need of monetary as well as fiscal support,” said Abheek Barua, chief economist at HDFC Bank. “There is a case for a sharp move from the Reserve Bank of India.”
Germany’s central bank has shot down EU proposals for a European banking union, warning categorically that eurozone liabilities cannot be shared without a fundamental shift towards fiscal and political union. Andreas Dombret, a key board member of the Bundesbank, said the grand plan by Brussels is premature and unworkable as constructed. “A banking union is a sensible way forward as long as liability and control are aligned. What I mean is you don’t give somebody your credit card if you don’t know what he or she is going to do with it.”  Mr Dombret said a pan-EMU deposit-guarantee scheme and a debt resolution fund would require “a genuine, democratically legitimated fiscal union” and a new treaty.

Banks must strengthen their capital positions now in order to protect the UK against a potential economic collapse in the future, a leading policy maker has warned. Paul Tucker, deputy governor of the Bank of England, said weak growth in bank lending remained a “serious” concern because households and small and medium-sized businesses relied on bank loans. With the “worst still possibly ahead of us”, banks should take what opportunities they can to build their resources now, he added in a speech last night. “In the event of a tidal wave rather than a tsunami, we might all of us – banks and their stockholders, as well as the authorities – be grateful for a few extra billion making the difference to firms’ survival.”
A shock blow for Britain’s manufacturers yesterday set back hopes of the UK pulling out of recession in the current quarter and heightened calls for more stimulus from the Bank of England. Official figures showed manufacturing accounting for 12 per cent of the overall economy sliding 0.7 per cent during April, as the Chancellor George Osborne’s “march of the makers” rallying cry was stymied by the deepening crisis in the eurozone. Experts warned of worse news on the way after purchasing manager surveys signalled the biggest slump in manufacturing since the collapse of Lehman Brothers last month. “Given that the eurozone crisis has intensified since April and recent manufacturing surveys have been very weak, it seems likely the industrial sector will remain a drag on overall GDP (gross domestic product) growth for some time to come,” Samuel Tombs, an economist at Capital Economics, warned.
George Osborne
has floated the possibility that Greece might need to be sacrificed to save the euro after a fresh day of jitters on the world’s financial markets saw Spain‘s long-term borrowing costs hit their highest level since the launch of the single currency. In a highly unusual step, the chancellor suggested that Greece may have to leave the eurozone so Germany could convince voters that it was worth pouring more money into the troubled currency. Speaking at a summit of chief executives organised by the Times newspaper, Osborne said: “I ultimately don’t know whether Greece needs to leave the euro in order for the eurozone to do the things necessary to make their currency survive. “I just don’t know whether the German government requires Greek exit to explain to their public why they need to do certain things like a banking union, eurobonds and things in common with that.
China is backsliding on the path of trade openness and economic reform that marked its entry to the World Trade Organization in 2001, the United States said on Tuesday during a biennial review of China’s trade policies. In tough remarks that were backed up by criticisms voiced by the European Union, US Ambassador Michael Punke said that since China’s last review in 2010, the trend towards state intervention in China’s economy appeared to have intensified. “China’s tighter embrace of state capitalism now runs directly counter to the economic reform goals that originally drove its pursuit of WTO membership, goals that had offered real leadership and real promise for China’s future economic growth,” he said, according to a transcript supplied by the office of the US Trade Representative.

A faster than expected slowdown in China poses a risk for the rest of the region, in particular commodity-dependent countries such as Australia, the World Bank says. In its latest Global Economic Prospects report, released on Wednesday, the bank says China’s growth is expected to accelerate from 8.2 per cent in 2012 to 8.4 per cent by 2014. The Washington-based development lender states that while production, trade and domestic demand in China slowed over 2011 to 2012 that was partly in response to earlier policies aimed at slo wing segments of the economy – especially housing. A “soft landing” is the most likely scenario but an overshooting to the downside can’t be ruled out, the twice-yearly report states. If that happens it would be bad news for Australia.
The United States (US) is seeing a dramatic surge in oil and gas production and could overtake the world’s biggest producers, Russia and Saudi Arabia, in another decade, a US official said here on Tuesday. ‘Some of the numbers are eye-popping,’ Mr Daniel Sullivan, commissioner in Alaska’s department of natural resources, told a panel of experts at the International Economic Forum of the Americas in Montreal.  In the last quarter the US produced six million barrels of conventional and unconventional oil a day, he said, adding: ‘We haven’t done that in 15 years

Six internal factors suggest that the United States’ economy is slowly healing. For some observers, these factors were deemed sufficient to form the critical mass needed to propel the economy into escape velocity. While I hoped that they might be proven right, the recent stream of weak economic data, including May’s timid net job creation of only 69,000, confirmed my doubts. With this and other elements of a disheartening employment report now suddenly raising widespread worries about the underlying health and durability of America’s recovery, it is important to understand the positive factors and why they are not enough as yet.
The total gross value of construction works performed by main contractors in Hong Kong in the first quarter of 2012 increased by 25.2 percent in nominal terms over a year earlier to 37 billion HK dollars (about 4.77 billion HK dollars), the city’s Census & Statistics Department said Tuesday. After discounting the effect of price changes, the total gross value of construction works performed by main contractors increased 15.9 percent in real terms over the same period. The gross value of construction works performed at private-sector sites totaled 11.2 billion HK dollars in the first quarter, up 49.2 percent in nominal terms compared with a year earlier. In real terms, it increased 41.2 percent.

South Korea’s jobless rate fell to 3. 1 percent last month from a year earlier as job creation in the service industry kept its solid growth trend, a government report showed Wednesday. The unemployment rate stood at 3.1 percent in May, down 0.1 percentage point from the same month of last year, according to Statistics Korea. From a month before, the rate was down 0.4 percentage point.  The jobless rate declined for 12 straight months in May on an on-year basis due to continued job creation in the service sector, the statistical agency said.
Allaying doubts about India’s success story, External Affairs Minister S.M. Krishna has assured American business that India will restore investor confidence and regain economic momentum and growth.  “In an era of global inter-dependence, not everything is within the powers of national governments,” he said in a keynote address Tuesday at 37th US-India Business Council (USIBC) Leadership Summit on the theme ‘Securing the 21st Century Partnership’  “But we are confident that we will restore investor confidence and regain economic momentum and growth,” Mr. Krishna said at the event on the eve of the third India-US strategic dialogue that he co-chairs with Secretary of State Hillary Clinton.

Ahead of mid-quarter review of monetary policy, the Finance Ministry, on Tuesday, made a case for lowering of the Cash Reserve Ratio (CRR), saying it would improve credit flow and spur economic growth.  “CRR is an issue addressed by the regulator (the Reserve Bank of India), but as owner of banks when we have to meet Basel III requirement, we will welcome CRR cut,” Department of Financial Services Secretary D. K. Mittal said on the sidelines of the meeting of heads of PSU banks with the Finance Minister here.  CRR is the portion of deposits that banks are required to keep with the central bank.
The World Bank has marginally raised India’s growth forecast for the current financial year from its January estimate, going against the tide that has seen many brokerage and international banks cut targets for the current year after GDP growth dropped to a nine-year low of 6.5% in 2011-12. In its Global Economic Prospects, June 2012, released on Wednesday, the World Bank expects India’s economy to expand 6.9% in 2012-13 against its 6.8% forecast in January this year.  The development bank has, however, pared estimates for 2013-14 sharply, pegging it only at 7.2% against 8.5% estimated initially, warning the developing world of a long period of volatility in the global economy.

The slowing growth figures for 2011-12, combined with the resurgent headline inflation numbers, seem to confirm the worst fears: all visible road signs seem to be pointing towards the realm of stagflation. In simple terms, stagflation is a condition marked by slowing growth and a state of rising inflation. Going by the current state of the two factors mentioned earlier, are we there yet?
Let’s start with the GDP growth numbers. The recently-released data for the fourth quarter of 2011-12 put the figure at 5.3%, which was much lower than market expectations. It’s true that everybody expected quarterly numbers to reflect the ongoing slowdown, but 5.3% was way lower than those expectations. The low Q4 data pulled down GDP growth for the entire 2011-12 to 6.5%, which is almost 200 basis points lower than 8.4% recorded in March 2011. But, this was no flash-in-the-pan slowdown. GDP growth, measured on a year-on-year basis, has been slowing down every consecutive quarter: 9.2%, 8%, 6.7%, 6.1% and 5.3%.
South Korea’s growth potential for this year falls in the upper 3 percent range this year despite a slowdown in the global economy, the head of the country’s central bank said Wednesday.
In a meeting with local CEOs, Bank of Korea Gov. Kim Choong-soo said the number for 2012 is slightly lower than the overall growth potential for the country that stands at 4 percent.
“This is not good, but is not too bad in light of recent economic developments around the world,” he said. Growth potential is the level of economic expansion a country can attain without triggering inflationary pressure.
Rapid loan growth in Russia this year could herald a spike in bad loans and capital shortages in the financial sector, especially if the euro crisis escalates, Standard & Poor’s has warned. Russian regulators are comfortable with the quick pace of lending growth, but bankers and analysts cautioned that similar complacency preceded the 2008 crash, which forced a sector bailout and plunged Russia into recession. “One of the key risks we see in Russia now is very high lending growth. … It was 25-27 percent in 2011 and we are likely to see quite a high figure this year as well,” said Yelena Romanova, associate director with Standard & Poor’s in Russia. The increase in non-performing loans, both as a proportion of fast-growing total loans and as an absolute sum, is also a matter of concern, Romanova added.
China International United Petroleum & Chemical Co., the trading unit of the nation’s biggest oil refiner, has boosted monthly crude imports from Iran to levels similar to 2011, according to an official at the parent company.  Shipments from Iran received by the unit known as Unipec averaged 270,000 to 280,000 barrels a day in April and May, in line with last year, said the official at China Petroleum & Chemical Corp., who declined to be identified because of company rules. Imports fell in the first quarter after Unipec, which accounts for half of China’s crude purchases from the Persian Gulf nation, failed to agree on annual payment terms with National Iranian Oil Co.

Iran will establish two new power transmission lines to boost electricity exports to Turkmenistan, said an official with the Iranian Energy Ministry. The two 400KV lines will provide the opportunity to exchange electricity among Iran, Turkmenistan, Kyrgyzstan and Uzbekistan, Abdolhamid Farzam told the Mehr News Agency.  He added that Iran plans to connect its power grid to the six countries of the Caspian Sea and the Caucasus region.  Energy Minister Majid Namjou said in May that the government plans to turn the country into a center for the transit of electricity in the region.

Hussman of Hussman Funds shares some good points on the markets and the central banker’s casino. Over the past 13 years, the S&P 500 has underperformed even the depressed return on risk-free Treasury bills. Real U.S. gross domestic investment has not grown at all since 1999, and even as a share of GDP, real investment remains weak. The ongoing debate about the economy continues along largely partisan lines, with conservatives arguing that taxes just aren’t low enough, and the economy should be freed of regulations, while liberals argue that the economy needs larger government programs and grand stimulus initiatives.