More On Greece!

The International Monetary Fund’s Poul Thomsen, a Dane who currently is the Deputy Director of the IMF’s European Department and the head of the IMF’s Inspection team for Greece appears to be right in the middle of the Greek restructuring negotiations. He is reported as saying on Tuesday that the “right balance” must be struck between Greek fiscal adjustments and reforms. In essence, as I read a recent Reuters article, Thompson is using fancy words to express his concern that the societal unrest that has already arisen in Greece periodically over the past few months will escalate if Greece’s Sovereign Debt is restructured in a way the Greek people perceive as imposing incremental economic hardship on them.

This strikes me as vey likely being true. However, hardship unfortunately is a fact of life where people find themselves, whether or not for reasons of their own making, in financial or other personal difficulty. While I am sure Mr. Paulson’s views and comments are well-intentioned, the Greek Sovereign Debt problems are very difficult and complex to deal ones.  I believe in all probability they are being dealt with in circumstances where any deal that is struck has no certain chance of succeeding in the longer-term. I don’t see the Greek debt problem as one that can be handled “with kid gloves”.

To add further complexity to Greece’s problems, the same article suggests that there is a prospect of elections in Greece as early as April.  I assume any such elections could result in governmental change at what I think will have to be a crucial time in Greece’s history.

See ‘IMF’s Thomsen says must be limit to Greek fiscal pain’ published February 1 by Reuters – reading time 3 minutes.

Italian Unemployment!

A brief article Monday reported that Italy’s unemployment rate (presumably the ‘official’ Government reported unemployment rate) currently is running at 8.6%.  Importantly I think, the article reports that Italian youth unemployment is running at almost 33%, and that 60% of Italians between the ages of 18 – 34 say …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 1 minutes.

Chinese Yuan Gold ETF

And so now China’s financiers are entering the Gold ETF markets.  An article this week reports that trading in a new Yuan based Gold ETF will begin February 14 trading.  This ETF, offered by the Hang Seng Bank, will track the London gold fixing price in U.S.$.

As I see things, all this does is introduce one more financial instrument enabling investors to participate in the physical gold price.  It strikes me …..continue reading.

Commentary reading time 1 minutes.  Referenced article(s) reading time 1 minutes.

U.S. Congress Insider Trading Update!

On November 9, 2011 I first commented with respect to ability of U.S. Congressman and their aids to trade based on insider information – see “Insider Trading – U.S. Congressmen!” – reading time 4 minutes. A few days after that, CBS’s 60 Minutes documented a story on said ‘insider trading’.  My commentary did not get the response that CBS’s documentary did. (smile)

Matters have now progressed, and on January 31 a number of articles reported updates. You might want to read at least …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 2 minutes.

U.S. Home Prices – Mixed Messages?

An article Tuesday reports that in November 2011 the residential property values in 20 American cities declined by 3.7% from property values experienced in November 2010. In result, the article suggests that this could – I say, particularly if such price reductions continue – result in …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 4 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• Christine Lagarde – Listen Between the Lines!
• World Leaders – Greek Emotion?
• Roubini at Davos!
• The Baltic Dry Index!
• Ray Dalio – October 20, 2011 Interview!

Christine Lagarde – Listen Between the Lines!

I have said in a number of these commentaries that I think Christine Lagarde, the Managing Director of the International Monetary Fund, is someone worth listening to.  I continue to believe that, but have now developed a new slant and new thoughts about ‘how to read what she is saying’.

I won’t burden you with recounting what Ms. Lagarde has been saying over the past ten days, most recently at the Davos Conference.  You will have seen many articles discussing her various speeches.  I have provided links to a number of speeches she has made over the ten days.  Read one or more of them if you haven’t seen them, or are simply a ‘bear for punishment’.

Here is what I have concluded, and if I am right I think my conclusion is an important one.  By way of background I am sure Ms. Lagarde is well informed, well intentioned, and is working to do her best to contribute to world economic stability.  That said, while I think much of what she says makes sense to me in a theoretical sense, I believe practice based on sound theory will work only if:

• there is adequate time available to the party(ies) willing to apply sound theory to a given set of facts and circumstances; and,
• the party(ies) faced with a problem or problems clearly have a common purpose and common goals, are cohesive and cooperative, and are all playing by the same rules.

I could list several more ‘conditions’.  However, I think neither of the conditions I have set out prevails in what I see as enormously complex current prevailing world economic conditions.  First, I don’t see ‘time being on the side of the decision makers in each country’ in the context of them developing a cohesive long-term plan that will satisfy all of the world’s current major developed and developing countries.  Second, I don’t see all those countries cooperatively and in short order satisfying the second condition I have set out.  In fact, to focus once again on the United States given it is the world’s largest economy by far, the polarized politicians in Washington act as if they can’t agree on where the nearest bathroom is.

In summary, I continue to think Ms. Lagarde is impressive, and am sure she is sincere in her intent.  The problem as I see it is she is attempting to ‘herd cats’ in circumstances where some of them seem to be ‘fat cats’ and some of them seem to be ‘starving cats’.  Herding well-fed and domesticated cats is a hard enough job.  Ms. Largarde perhaps could pull that off.  However, the current cats she is trying to herd are quite different and impossible ones to herd – or so I think.

See ‘Global Challenges in 2012’.  A speech given January 23 in Berlin by Christine Lagarde, Managing Director of the International Monetary Fund – reading time 7 minutes.  Also see:

• ‘IMF’s Lagarde Sounds Alarm Over Europe’, published in the Wall Street Journal Blog on January 23 – reading time 4 minutes; and,
• ‘Lagarde: World Economy Risks Depression-Era Collapse in Demand’, published by Fox Business on January 23 – reading time 4 minutes.

U.K. In Technical Double Dip?

A recent article reported that UK GDP numbers were expected to be reported to be negative in Q4 2011.  Those numbers have now reported (see second article reference), and came in at -0.2%.  That is the first quarter the UK GDP number has been negative in some time, and if Q1 2012 proves also to generate a negative GDP number the UK then will be in an official ‘technical recession’ – the first of the ‘greatly feared’ ‘double-dip’ country recessions …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 7 minutes.

Portugal – Further News Coming?

I have said in these e-mails that in a Eurozone context I worry about Spain after I first worry about Greece. Portugal has, of course, also been on my radar screen – and I suspect the radar screens of most of you as well.  Italy is also, of course, on my radar screen.

Tuesday it was reported that “untrusting underwriters” increased the cost of insuring Portugal bonds on Monday, insisting the payment be made …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 3 minutes. This Commentary includes a suggestion that you speak with your Investment Advisor(s) with respect to its subject matter.

Spain – Q4 Economic Contraction!

In Q4 2011 Spain’s economy has been reported as contracting by -0.3%. – this after seven consecutive quarters without economic contraction.  Once again, economists define technical recession is defined as two consecutive quarters of contracting GDP. Spain’s economy currently is expected …..continue reading.

Commentary reading time 2 minutes.  Referenced article(s) reading time 2 minutes. This Commentary includes a suggestion that you speak with your Investment Advisor(s) with respect to its subject matter.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• More On Greece!
• World Leaders – Greek Emotion?
• Roubini at Davos!
• The Baltic Dry Index!
• Ray Dalio – October 20, 2011 Interview!

World Leaders – Greek Emotion?

I suggest you take 4 minutes and read what I think is an important follow-up commentary on last week’s Davos Conference.

An article published by Bloomberg on January 29 reports that no world economy is safe from Europe’s debt crisis according “global finance chiefs”. Hong Kong’s Chief Executive, Donald Tsang, is quoted as saying:

“I’ve never been as scared as I am about the world. Nobody’s immune. You need decisive action. You need to inspire confidence.”

Concurrently, Yale University professor Robert Shiller and Nouriel Roubini both contributed negative comments and concerns. Christine Lagarde again stated she wants to increase the International Monetary Fund’s lending capacity by US$500 billion.  She is looking for further IMF contributions from countries already ‘debt-strapped’. 

At the same time, on January 30 Toronto’s Globe and Mail reported that the Greek Finance Minister has rejected a German plan to impose a Budget Overseer on Greece in return for a new €130 billion bailout. From my perspective, the Greek debt restructuring is beginning to border on the ridiculous. Without being there, the Greeks seem to be dealing at least in part with the restructuring from an emotional base. As I often have said in these e-mails, logic in the end prevails over emotion. 

In the end, it may be that Greece and its creditors will simply run out of time against a March 20 deadline. That said, I doubt that will happen.  I think Greek and the Eurozone’s problems will likely once more be time delayed, as the consequences of that not happening are so uncertain.  I continue to think that in the end Greece will very likely default on its debt in 2012, or will de facto default through a renegotiation mechanism that will so seriously reduce the owing on its remaining outstanding debt principal and the interest rates on that remaining debt that Greece effectively will have defaulted – but Greek and world leaders will be able to say Greece did not ‘technically default’.

I also do not believe that a de facto default will ultimately solve Greece’s debt problems and potential serious societal disorder.  I think it highly likely this will prove to be a very interesting summer as things heat up in Greece and other northern hemisphere developed countries in more ways than one.

I suggest you speak with your investment advisor and determine whether he she agrees with me on this or not. 

See ‘Davos Leaders Urge Europe to Fix Crisis Hurting Growth’ published January 29 by Bloomberg – reading time 3 minutes.

Also see ‘Greece angrily rejects German plan for EU budget control’ published by The Globe and Mail on January 30 – reading time 3 minutes.

Robbing Peter to Pay Paul – U.S. Life-Style & Societal Issue?

A recent article reports a number of statistics related to aging Americans that I think you ought to know about if you don’t.  I also think you should reflect on these statistics in the contexts of both current world macro-economics and your investments and investment/trading strategy.  The article apparently is based on a sample of 150,000 Americans with 401K’s.  The Canadian equivalent …..continue reading. 

Commentary reading time 4 minutes.  Referenced article(s) reading time 8 minutes

Should The Rating Agencies Be Listened To? 

I am not sure why Jim Rogers, who apparently retired at age 37 after working with George Soros for several years, failed to include Fitch in a recent brief Internet posting he made.  While most days I read at least the headlines of what Rogers writes and think on balance much of what he says makes sense, in this case I think …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 2 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• More On Greece!
• Christine Lagarde – Listen Between the Lines!
• Roubini at Davos!
• The Baltic Dry Index!
• Ray Dalio – October 20, 2011 Interview!

Roubini at Davos!

Nouriel Roubini, the globe-trotting New York University Economics Professor who gained wide acclaim by predicting the economic events that transpired in 2008, continues to be in the economic predictions business. Friday in Davos, speaking in one of the final sessions of this year’s World Economic Forum, he is reported as having made the following specific predictions:

• Eurozone countries (I doubt he was including Germany) “and not just Greece – are insolvent”.  My comment:  I don’t think there is much news in that;
• Greece will leave the Eurozone this year, and Portugal would leave the Eurozone after this year.  My comment:  I don’t know whether or not either will  leave the Eurozone.  I think the bigger question is whether or not Greece with default or ‘de facto’ default on its debt, and that question will be answered long before the end of 2012;
• there is a 50% chance the Eurozone will break up in the next 3 to 5 years.  My comment:  I don’t have an opinion that, other than having just spent Friday in London in part talking about that very thing, I would say that the senior UK businessmen I talked with believe it is not in Germany’s interest for the Eurozone to break up;
• if the U.S. and Iran go to war, oil prices would increase by 50% and there will be a global recession.  My comment:  Roubini may be correct in this.  I have doubts as to whether the U.S. will go to war against Iran, as I think the U.S. Government likely shares that view and likely believes that a significant increase in oil prices would have a very negative effect on what I think to be a fragile U.S. economy.  That said, Leon Panetta, the current U.S. Secretary of Defense said on 60 minutes last evening that the U.S. would not tolerate Iran’s development of a ‘deliverable nuclear weapon’, so for that and other reasons I clearly could be proven wrong;
• there is a recession in the UK, the U.S. “is not doing great”, India is in slowdown, and there will be significant slowdown in China in 2012.  My comment:  antidotally, from conversations with the people I spoke with in London on Thursday and Friday things are looking quite bleak there economically.  I don’t have an informed opinion on slowdowns in India and in China other than the 2012 GDP growth rates in both those countries are forecast to decline from those of 2011.

Roubini proved to be correct in his forecasts prior to 2008.  The question has to be:  Was that a ‘one swallow does not a summer make’ moment?  It seems to me one at least needs to think hard about what Roubini says, and not dismiss it out of hand.

See ‘Eurozone will collapse this year, says Nouriel Roubini’ published by The (UK) Telegraph on January 28 – reading time 1 minute.

Commodities – The Next Decade?

In a recent article written by Frank Holmes, CEO and chief investment officer of US Global Investors, there is a very interesting Periodic Table of commodity returns which shows the annual returns for 14 major commodities including coal, copper, crude oil, gold, nickel, silver, and zinc. If you are not familiar with that table I suggest you visit this article and download …..continue reading.

Commentary reading time 3 minutes.  Referenced article(s) reading time 5 minutes.

George Soros On Europe and Riots! 

George Soros, the well-known successful investor (right up there with Warren Buffet) can – at least in my view – hardly be expected to rant about things he doesn’t believe.  A recent article reports Soros is now expressing the views: 

• that “at times like these, …..continue reading.                                  

Commentary reading time 3 minutes, thinking time much longer.  Referenced article(s) reading time 5 minutes.

Iran To Be Paid In Gold?

A January 24 article has reported that India may have agree to pay Iran in physical gold for its oil – and that China may follow suit. The article says that these moves, if made, will be made to circumvent US sanctions that target countries who trade with Iran. The article also reports that Iran and India are negotiating backup alternatives with …..continue reading.

Commentary reading time 4 minutes.  Referenced article(s) reading time 13 minutes.

Visit Stock Research Portal for stock market data, analysis, and research on over 1,600 Mining, Oil and Gas Companies listed on the Toronto and Venture Exchanges. See our Legal Disclaimer.

Possibly Related Posts:

• More On Greece!
• Christine Lagarde – Listen Between the Lines!
• World Leaders – Greek Emotion?
• The Baltic Dry Index!
• Ray Dalio – October 20, 2011 Interview!