Why Read:  Because Youth Unemployment has to be at or near the top of both near-term and long-term economic issues that must be addressed, or if they aren’t, bring the ‘edge of the economic and societal cliff’ ever closer.

Featured Article:  A May 14 article focuses on Europe’s youth unemployment numbers.  The article reports that not only do many European countries currently suffer from serious youth unemployment rates, but also points out that while this may be a somewhat exacerbated problem currently, it is not a new phenomenon in many European countries.  For example, the article reports that while youth unemployment rates have reached 51% in Greece and Spain, 36% in Italy, and 30% in Ireland, the average youth unemployment rate for the past 40 years has been:

• 30% in Italy, where Italy’s GDP grew at an annual rate of 2% during the 1994 – 2000 period and Italy’s youth unemployment averaged 33% in those growth years; and,
• 32% in Spain, where Spain’s GDP grew at an annual rate of 3.6% from 1995 – 2007 and Spain’s youth unemployment averaged 28% in those growth years.

The article claims that these historic European youth unemployment rates are the result of structural and educational problems – citing Germany’s current ‘just over’ 8% youth unemployment rate and better coordinated school system and industry apprentice programs.

Commentary:  That said, irrespective of Europe’s past youth unemployment rates, youth unemployment simply has to be a very large and looming societal and economic problem in developed countries.  The following table sets out the 2011 GDP, latest reported population, and 2007 and current reported youth unemployment rates for seven of the world’s current 10 largest developed economies (2007 statistics for Japan, Russia and Australia not found):

 Sources: Wikipedia, various, referenced Guardian article

These 2007 and 2012 youth unemployment rate statistics are set out in the following table: 

A second article reports on youth unemployment in OECD (Organization for Economic Co-operation and Development) countries.  That article, published in The Guardian yesterday, has a number of interesting charts and tables that include many other countries – all of which charts and tables tell the same general story as set out in the foregoing table and chart.

Finally, a March, 2012 article reported the International Monetary Fund as saying the “the average unemployment rate among workers ages 15 – 24 is nearly twenty percent”.

The solutions to youth unemployment in developed countries, once one gets past structural issues (meaning improper or inadequate training for available jobs, or jobs not available in proximity to possible employees), in essence are two in number, neither of which is likely to reverse in the next several years:

• generate real (not inflationary) economic growth in the countries with youth unemployment problems.  Given the current general economic malaise in many developed countries, this is an increasingly unlikely scenario; and/or,
• establish lower forced retirement ages, thereby making jobs available to youth that are now being filled by otherwise retirement age people who are working to retain their life styles as best they can.  That said, the trend in legislated retirement ages is tending upward, as elderly people live longer, and as governments then have extended pension time horizons they want to offset.

The consequences that may or will flow from prevalent and increasing youth unemployment include:

• a sense of failure on the part of both uneducated and educated youth looking for jobs, not finding them, and watching their ‘expected careers’ either being postponed as to starting date, or slipping away entirely;
• an increased reliance on parents, relatives and friends for moral and financial support;
• an increase in ‘youth frustration’ with both those that govern the countries in which the unemployed youth live, those who do have jobs – perhaps in some instances focused on the ‘otherwise retired people’ who take jobs that youth would otherwise fill, and the society they live in generally.  At some point that frustration may manifest itself in anti-social actions by those youth whose ‘smart-phones’ and social networks enable ready communication among them.

The seriousness of this issue cannot be overstated.  Unfortunately, like many things today driven by economics, there are no ready practical answers.  Once again, it is frustrating to:

• be able to readily see a problem;
• not be able to offer one or more practical suggestions as to how to fix that problem in an expedient way; and,
• observe most people apparently so focused on their own problems that they seem ‘not have time’ to take their heads out their own sandbox and consider what is going on around them.  Unfortunately the obvious problems people don’t see today may prove be the ones that tomorrow will hit them over the head from behind.

Europe’s perpetual ‘wasted youth’

Source:  Business Spectator, Marco Annuziata (VOX EU), May 14, 2012

Reading time:  4 minutes

Also read:  Youth unemployment across the OECD: how does the UK compare

Source:  The Guardian, Ami Sedghi, May 16, 2012

Reading time:  3 minutes

Also read:  Global Youth Unemployment Rate Staggeringly High: ‘Lost Generation’ Feared

Source:  International Business Times, March 16, 2012

Reading time:  3 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news.

Spain could be locked out of the markets, says Mariano Rajoy

Overview:  Spain’s Prime Minister on state television

Source:  The Telegraph, Louise Armitstead, May 16, 2012

Reading time:  4 minutes

Debt crisis: Greek euro exit looms closer as banks crumble

Overview:  Discusses Greek bank withdrawals

Source:  The Telegraph, Ambrose Evans-Pritchard, May 16, 2012

Reading time:  3 minutes

Today’s Unabridged E-mail includes five other ‘Speak For Themselves’ Headlines dealing with the following topics:

• JP Morgan – possible higher losses;
• China economy;
• China real estate;
• China direct foreign investment; and,
• United Kingdom unemployment.

JP Morgan – Aftermath?

Why Read:  Because this is something that you may not have focused on, but ought to – and for sure ought to discuss with your investment advisor(s) and every person you know who you think understands something about the financial markets.

Commentary:  By now everyone has heard or read about the approximate U.S.$2 billion in losses (now thought ….. (continue reading)   

Commentary reading time 3 minutes.

Referenced article(s) reading time 9 minutes, thinking time much longer.  Discussion with investment advisor(s) and ‘market-savvy’ friends recommended

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:

• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity
• Marc Faber On Biased Views!

An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’! is a post from: StockResearchPortal.com Blog

Why Read:  Because now that Spain’s economic woes are close to the center of world economic attention you need to focus on Italy – while still keeping Greece, Portugal, Spain and the Netherlands squarely on your ever more crowded radar screen.

Featured Article:  A May 15 article focuses on Italy’s current debt levels and debt yields, reporting on:

• Moody’s downgrade of 26 Italian banks on Monday evening, May 14;
• an increase in Italian bond yields to 5.86% on May 15 following a declaration by Italy’s ‘data agency’ that Italy’s GDP shrank 0.8% in Q1 2012;
• Italy being the only ‘major state’ to have fallen in real per capita income since 2000; and,
• a former Italian Premier saying that Italy, along with France and Spain, risks ‘instant contagion’ if Greece leaves the Eurozone, apparently saying “The whole house of cards will come down”.

Commentary:  Having suggested some months ago, when Spain seemed to be off most media radar screens when it seemed it should be on them all, it now seems Italy is moving ever closer to joining Greece and Spain as an important ‘center of attention’.  Consider that France may be several months behind, but given its recent non-austerity government mandate, is nonetheless ‘in the theatre’, perhaps edging toward ‘the wings’ and might yet tip-toe toward center stage.

Supplementary to the foregoing;

• Italy’s economy measured by nominal (inflation included) GDP is reported as having been in the order of U.S.$2.2 trillion in 2011, making Italy the eighth largest economy in the world, the fourth largest economy in Europe – after Germany (U.S.$3.6 trillion), France (U.S.$2.8 trillion) and the United Kingdom (U.S.$2.4 trillion), and the third largest economy in the Eurozone (after Germany and France);
• Italy’s inflation rate was last reported in March at 3.3%; and,
• Italy’s reported unemployment rate last reported in March was 9.8%.  Italy’s youth (ages 15 – 24) unemployment rate currently is reported to be about 36%.  Contrast this with Spain’s current comparative reported unemployment rates of about 24% and 51% respectively.  The Italian reported unemployment rates are up from one year ago by approximately 1.5% and 6% respectively.

Clearly, increased focus should be directed to Italy going forward.  Simply put, Spain may well prove to be ‘too big to fail’, at least for the time being.  If that is true, it has to be even more the case with Italy.  If concern is being voiced with respect to possible contagion issues related to Greece, imagine the escalated extent of contagion concern if Spain’s and Italy’s economies continue to deteriorate.

Importantly, watch for escalated discussion and concern over real and nominal GDP growth generally, and country specific real and nominal GDP growth.  Simply put, without real GDP growth economic trends in the developed and developing countries are virtually certain not to be positive.

That said, pay careful attention to media and other data on Italy going forward as you think about and plan your financial affairs.  Italy is definitely something to discuss with your investment advisor(s), and most astute financial friends.

Moody’s Downgrades Italian Banks

Source:  The Wall Street Journal, David Enrich, May 15, 2012

Reading time:  3 minutes

Italy’s banks shaken as economic slump deepens

Source:  The Telegraph, Ambrose Evans-Pritchard, May 15, 2012

Reading time:  4 minutes

List of countries by GDP (nominal)

Source:  Wikipedia

Reading time:  3 minutes

Italy Inflation Rate

Source:  Trading Economics

Reading time:  1 minute

Italy Unemployment Rate

Source:  Trading Economics

Reading time:  1 minute

Europe’s perpetual ‘wasted youth’

Source:  Business Spectator, Marco Annuziata, May 14, 2012

Reading time:  3 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news.

Another chart of the day: Greek bank deposits collapse

Overview:  Discusses Greek private sector deposits and possible Greek bank run

Source:  Credit Writedowns, Edward Harrison, May 16, 2012

Reading time: 2 minutes

Meet the Man Who Controls More Money than Ben Bernanke

Overview:  Discusses China Central Bank, Chinese inflation, and Chinese bad banking debts

Source:  Financial Sense, Dan Collins, May 15, 2012

Reading time: 3 minutes

Today’s Unabridged E-mail includes six other ‘Speak For Themselves’ Headlines dealing with the following topics:

• Greek default importance;
• Bank of England forecasts;
• Eurozone and financial markets;
• Greek bank run;
• Deepwater discoveries update; and,
• Eurozone industrial outputs.

Prospective Resource Prices?

Why Read:  Because the author of this article might be right, and it is always worth reading and thinking about an increasingly expressed view.

Featured Article:  A May 10 article says that as a result of what the author claims to be an expected Chinese economy ‘hard landing’, that China’s “intense demand” for commodities (other than agricultural commodities) is….. (continue reading) 

Commentary reading time 2 minutes.

Referenced article(s) reading time 8 minutes, thinking time much longer.  Discussion with investment advisor(s) recommended

President Obama – How Long Is The Straw?

Why Read:  Because what is said here is something to think seriously about.

Commentary:  Consider the following:

• how badly the Republicans in September, 2008 must have wished for a post-election postponement of the Lehman Bros. bankruptcy, and a concurrent stable U.S. equities market until ….. (continue reading)      

Commentary 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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity
• Marc Faber On Biased Views!

After Spain, is Italy Next? is a post from: StockResearchPortal.com Blog

Why Read:  Because what is happening in Spain is happening quickly, may not be understood in a property valuation context, and may be a harbinger of things to come in other countries.

Featured Articles:  Two May 11 articles raise further issues with Spain’s announcement last week that some of its banks are undercapitalized and have not made sufficient property loan provisions:

• the first article reported Friday that rather than inject equity into the banks it believes requires more capital, Spain plans to lend those banks money at high interest rates; and,
• the second article reported on a further move by the Spanish Government to cause key Spanish banks:
• to raise their provisions against “toxic” property loans from 7% to 30%,
• to separate their real estate loans from the rest of their assets,
• to raise what appears from the article to be at least 30 billion euros of additional capital within 15 days to counter-balance falling Spanish property prices, and
• have the value of their property portfolios scrutinized by two separate auditing firms – who will determine the value of their property portfolios.

Commentary:  Follow this closely, and consider that:

• it is highly doubtful, unless these Spanish banks have been working on raising equity for some time, and simply haven’t completed the process, that they will succeed in raising new equity within 15 days (May 26);
• it is likely beyond highly doubtful that if the two auditing firms are just now beginning an audit of property values underlying the bank’s property loan portfolios, they will be able to reach meaningful property valuation conclusions within two weeks – simply because of the time-frame involved, and the likely complexity of their task;
• now valuation undertakings have been announced, it may be that any interested ‘new equity investors’ may wait until the completion of those valuations to make ‘equity injection’ decisions;
• property (or business) values are subjective enough, and difficult enough, to determine in normal markets.  They become ever more difficult to determine and subjective the more uncertain and volatile are the markets for said properties; and,
• where property values must be determined in poor markets, the valuation concept of ‘blockage’ has to be considered.  That is, it is one thing to put one property on a market where ‘normal market conditions’ prevail.  It is quite another thing to opine on the value of 500 or 5,000 (or more) properties where an abnormal market prevails, and where one has to take into account what would happen if all those properties were introduced to that abnormal market at the same time – with unusual downward pressure on price.

The last point is something that not all persons opining on property or business value necessarily focus on or input into their value conclusions.  This last point is also something that may have influenced the decisions made in Europe and America in 2008 – 2009 when mark-to-market accounting rules where changed.  Consider carefully that changes in reporting do not impact market reality at a point in time.

The two audit firms that have been appointed to opine on the Spanish bank property values have a very difficult job.  Potential arm’s length lenders or equity investors likewise will have very difficult decisions to make.

Stay tuned to this issue – it is very important both to the current Spanish economic dilemma, and also likely very important in the context of potential other country/financial markets contagion.

In the end, it may be that Spain will have to guarantee either loans or equity injections into its banks.  If that proves to be the case, that will only come at a cost to Spain and exacerbate its economic problems.

Also see a May 11 Press Release issued by the International Monetary Fund, which reports IMF Managing Director Christine Lagarde’s positive statements on last week’s moves by the Spanish Government.  Ms. Lagarde’s statements may be seen in coming weeks and months to be a theoretically sensible, but at the same time a practical non-starter from a Spain economic recovery prospective point of view.

Spain’s lack of cash in bank reforms falls short of investors’ expectations

Source:  The Financial Post, Julien Toyer and JesDus Aguada (from Reuters), May 11, 2012

Reading time: 3 minutes

Spanish banks given 15 days to plan how to raise 30 billions euros or face nationalism

Source:  The Telegraph, Louise Armitstead, May 11, 2012

Reading time: 3 minutes

Also read:  Spain imposes drastic reform to clean up banks

Source:  The Telegraph, May 11, 2012

Reading time: 2 minutes

IMF Managing Director Welcomes Spain’s Measures to Strengthen the Banking Sector

Source:  The International Monetary Fund, May 11, 2012

Reading time:  2 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Wasted Youth

Overview:  Discusses European youth unemployment and its importance

Source:  VOX Blog, Marco Annuziata, May 13, 2012

Reading time: 2 minutes

India witnesses huge growth in FDI in steel industry

Overview:  Discusses growth in Foreign Direct Investment in India’s steel industry

Source:  Commodity Online, May 13, 2012

Reading time: 4 minutes

Today’s Unabridged E-mail includes four other ‘Speak For Themselves’ Headlines dealing with the following topics:

• Youth unemployment importance;
• Current German Government prospects;
• China’s prospective economic models; and,
• China’s and potential world deflation.

Excellent Gold Slideshow!

Why Read:  Because this 58 slide presentation is a very balanced overview of physical gold.

Featured Article:  On May 11 Business Insider published a lengthy presentation on the history of physical gold, its price drivers, what selected individuals think about it going forward, and what U.S. Federal Reserve Chairman Bernanke thinks of it.

Commentary:  If you own, or are contemplating owning ….. (continue reading)       

Commentary reading time 1 minute.

Referenced article(s) reading time 10 minutes, thinking time much longer.

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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity
• Marc Faber On Biased Views!

Spain and Spanish Bank Dilemma! is a post from: StockResearchPortal.com Blog

Why Read:  Because it is a good overview of some of the issues facing not just gold miners, but miners generally – all of which going forward will impact the share prices of those companies from what they otherwise might be.

Featured Article:  A May 9 article speaks to the following issues that are affecting the cost structure of gold (and other) miners:

• the article reports on PriceWaterhouseCoopers study that suggests that in 2011 cost inflation experienced by miners generally fell in a range of 10% – 15%, and for gold miners viewed in isolation was somewhat higher – being about 20%;
• included in those escalated costs are escalated labor costs, as labor demands its share of commodity price increases;
• increased costs related to shortages in skilled labor (see following);
• in the case of gold miners, average ore grades have declined by 30% after 1999, meaning that extraction costs per ounce have increased;
• further in the case of gold miners, for some the processes are becoming more complex and inputs such as acids and reagents are becoming more expensive;
• environmental costs are continuing to escalate;
• enhanced safety standards are resulting in increased costs;
• as corporate social responsibility issues come more to the fore, they add operating costs; and,
• governments in countries where miners operate are looking to extract more taxes, and are increasing permitting and licensing fees.

Commentary:  Aside from these issues, investors and traders should also address at least the following things:

• the issue of enhanced country risk (which is country specific) which may prove to impact required investment/trading rates of return, as contrasted with directly impacting operating costs;
• the impact on mining company costs related to implementation of the IFRS accounting standards; and,
• the flip side of all this, being that in the end escalated costs have to impact operating decisions.  At least in theory this in the end will result in reduced supply – which also in theory ought to underpin the price of gold and other resource commodities.

Importantly, with respect to available manpower and skilled labour, you ought to read an article titled Crisis in Mining, written by Richard Mills (Ahead of The Herd Blog – reading time 4 minutes).  That article discusses:

• retirements, emerging market labour demands, and skilled labour (geologists and engineers, for example); and,
• prospective migration of skilled labour to higher grade projects at the expense of lower grade projects.

Mr. Mills considers this labour issue second only to Country Risk (including Nationalism issues) as largest risk faced by the mining sector.

Should Investors be Discouraged by Cost Inflation

Source:  Gold Investing News, Dig Media, Michelle Smith, May 9, 2012

Reading time:  4 minutes, thinking time longer

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Moody’s Issues Capital Warning to Global Banks

Overview:  Reports Moody’s warns of possible pending bank downgrades

Source:  CNBC, (from The Financial Times, Tracy Alloway and Tom Braithwaite), May 10, 2012

Reading time: 4 minutes

April 2012 Devastating for Retailers

Overview:  Reviews recent retail sales in France, Germany, Italy and U.S.

Source:  Profit Confidential Blog, Michael Lombardi, May 10, 2012

Reading time: 3 minutes

Today’s Unabridged E-mail includes four other ‘Speak For Themselves’ Headlines dealing with the following topics:

• Canada and U.S. March net trade results;
• Possible Greek Government leverage;
• Current gold price; and,
• Sovereign Debt importance.

Spain’s Banking – Important Update!

Why Read:  Because what was reported two days ago was significantly adjusted upward (negative direction) one day ago.

Featured Article:  A May 10 article reports that one day after Spain announced the takeover of Bankia SA, its fourth largest bank, when the then reported expectation was that Spanish banks collectively ….. (continue reading)     

Commentary reading time 3 minutes.

Referenced article(s) reading time 3 minutes.

How Important Will This Prove To Be?

Why Read:  Because this may prove to be the ongoing drop of ‘the next important snowflake that causes an economic avalanche’ in the U.S.

Featured Article:  A May 11 article reports that 230,000 more jobless Americans will lose their extended unemployment benefits ….. (continue reading)  

Commentary reading time 1 minutes.

Referenced article(s) reading time 3 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:

• Sprott On Economic Fundamentals (and Gold)
• Commodity Production Cost Curves
• Can Italy Be Far Behind?
• Social Unrest – World Food Prices!
• Country Risk Must Read!

Mining Cost Escalation – Impact? is a post from: StockResearchPortal.com Blog

Why Read:  Because you should know about this if you don’t, as China banks entry into U.S. banking could prove to be important.

Featured Article:  A May 9 article reported that the U.S. Federal Reserve has agreed to let three Chinese Government controlled banks set up U.S. branches and invest in U.S. banks, referencing U.S. Federal Reserve statements that:

• the 71% Chinese Government owned Industrial and Commercial Bank of China (China’s biggest bank with assets estimated at U.S.$2.5 trillion) will become a bank holding company;
• China Investment Corporation (CIC), an investment vehicle responsible for investing the Chinese Governments foreign exchange reserves, and CIC controlled Huijin Investment will become bank holding companies;
• these three Chinese entities (either individually or in some combination) will be allowed to take control of New York based Bank of East Asia;
• the Federal Reserve has concurrently approved:
• the Bank of China (China’s third largest bank, and 71% owned by the Chinese Government) to set up a branch in Chicago in circumstances where that bank currently has branches in Los Angeles and New York, and
• the Agricultural Bank of China (China’s fourth largest bank with assets reported to be U.S.$1.85 trillion, and 83% owned by the Chinese Government) to set up a branch in New York.

Commentary:  The referenced article, typical of many, simply reports on these U.S. Federal Reserve decisions.  It is the only article of over 2,500 overviewed in the past two days that makes mention of these decisions.

Consider the implications of these Federal Reserve decisions in the context of the proverbial ‘Camel in the Tent’.  The question now is not whether the Camel is in the tent, the question is only whether, when, and over how long a period of time it will take the powerful Camel, whose head (the part it thinks with) is now in the tent, to take the tent over.

Further comments and some possible consequences:

• in theory this is simply a further extension and maturation of globalization, a road the world has been on for at least twenty-five years;
• not immediately, but over time if (or more likely ‘as’) Chinese banks build larger bases in the U.S., this has to impact U.S. protectionism policies with respect to tariff and trade policies;
• likewise in time, this may (or more likely ‘has to’) impact U.S. based asset protectionism in the context of Chinese investment in U.S. based assets it considers strategic to it;
• as a minimum this U.S. Federal Reserve decision is from China’s perspective ‘chicken soup’ – it might help but it can’t hurt;
• at an extreme this U.S. Federal Reserve decision signals a further shift in world economic power;
• remember the golden rule ‘he who has the gold makes the rules’; and,
• recall the old adage: ‘give him an inch and he’ll take a mile’.

What appears to be a comparative ‘passing news item’, may prove over time to be what future commentators may come to reference as a ‘land-mark’ economic event similar to President Nixon’s August 1971 declaration of a floating gold price.

This is something to think hard about, and to discuss with your investment advisors and financially astute friends.

Federal Reserve allows Chinese-controlled banks to take stakes in US banks

Source:  The Telegraph (from Reuters), May 9, 2012

Reading time:  3 minutes, thinking time much longer

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

China Investment halts European debt buying on crisis concerns

Overview:  Discusses China Investment decision to not purchase European bonds and its focus on African investments

Source:  The Financial Post (from Bloomberg, Andres Martinez), May 9, 2012

Reading time: 3 minutes

China’s trade surplus widens in April

Overview:  Reports on China’s widened April trade surplus, as Chinese imports stagnated

Source:  The Globe and Mail, Elaine Kurtenbach, May 10, 2012

Reading time: 3 minutes

Today’s Unabridged E-mail includes four other ‘ Speak For Themselves’ Headlines dealing with the following topics:

• Germany and inflation;
• Investors and gold;
• China and world reserve currency; and,
• UK quantitative easing policy change.

Today’s ‘Speak For Themselves Country Risk’ World Headlines

Why Read These Headlines:  To Save Time and Stay Informed on Country Risk Issues

Business, miners hit in Australian budget

Overview:  Discusses the recent Australian budget changes that will impact the Australian mining sector

Source:  Mineweb, Ross Louthean, May 9, 2012

Reading time:  4 minutes

Spain and Its Banks!

Why Read:  To keep up to date with things going on in Spain, and to focus on possible latent ‘mark-to-market’ issues that may underlie more banks than just those in Spain.

Featured Article:  A May 9 article reports on the Spanish Government’s focus on Spain’s banks and that Government’s plans to force those banks to set aside funds in the order of U.S.$45 billion in recognition of losses on their property loan holdings. This amount is said to represent about 12% of total Spanish bank exposure to ….. (continue reading)     

Commentary reading time 2 minutes.

Referenced article(s) reading time 9 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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• No Alternative To Austerity
• Marc Faber On Biased Views!

China Banking Camel In U.S. Tent? is a post from: StockResearchPortal.com Blog

Why Read:  Because this is something you need to consider carefully as you listen to and read news reports from major media and internet pundits – and monitor world economic developments both in the near and longer term.

Featured Article:  A May 9 article discusses demands, widely reported in the past 24 hours, by some German Government leaders that either Greece stay the course with negotiated austerity measures or be denied future international financial aid.

Commentary:  This, along with other negative economic news and the aftermath of the May 6 French election results, has the financial and precious metals markets in a tizzy. That is understandable in circumstances where events that the financial markets presumably thought possible last week:

now have crystallized; or,

are becoming ever more obvious or plausible.

At the same time:

• fiat funds are said to be flowing to the U.S.$ as a safe haven;
• the gold (and silver) price have dropped significantly in the past 24 hours;
• it seems ever more likely that in the aftermath of the May 6 Greek election a Greek Coalition Government is unlikely to be formed.  If this proves to be the case, Greece almost certainly will spiral downward economically from here with adverse consequences that seem highly likely to extend beyond Greece itself;
• the events of the past three days have pushed Spain ‘off the radar screens’ for the time being – but to borrow a word from Ben Bernanke, that omission is ‘transitory’; and,
• if you participate in the financial markets either directly or indirectly, the importance of keeping up to date with the evolving, complex economic events of the day may prove never to be more important.

German Leaders Threaten End to Greek Aid

Source:  Spiegel International, May 9, 2012

Reading time:  3 minutes

Also read:  Greece Heading Towards Re-Election and Euro Exit

Source:  Economy Watch Blog, May 9, 2012

Reading time:  4 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Keynes’ Legacy: 24% Unemployment

Overview:  Adopts Spain’s/Greece’s unemployment rates as a segway to discuss Keynesian economics

Source:  Financial Sense Blog, Ned W. Schmidt, May 7, 2012

Reading time: 5 minutes

France and Europe with Francois Hollande

Overview:  Discusses France’s rejection of Germany’s ‘austerity only’ economic strategy

Source:  Brookings, May 6, 2012

Reading time: 3 minutes

Today’s Unabridged E-mail includes four other ‘Speak For Themselves’ Headlines dealing with the following topics:

• Funding of U.S. statistical data;
• Potential U.S. recession;
• Wealth disparity importance; and,
• Chinese residential vacancies.

Global Growth Slows

Why Read:  Because without global growth in real (inflation excluded) terms ‘we ain’t seen nothing yet’ in the context of world economic problems.

Featured Article:  A May 8 article includes a report on the JP Morgan Global Composite PMI (Purchasing Managers Index) report that suggests April saw a five-month low in ‘growth of global economic activity’.  It goes on at length to discuss manufacturing in ….. (continue reading)       

Commentary reading time 2 minutes.

Referenced article(s) reading time 8 minutes.

Can It Happen In America, the UK, etc.?

Why Read:  To keep you up at night.

Featured Article:  A brief article Tuesday summarizes the Milan, Italy MIB Index and the Spanish IBEX index highs, lows, and current levels, as set out in the following table ….. (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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• Marc Faber On Biased Views!

No Alternative To Austerity is a post from: StockResearchPortal.com Blog

Why read:  Because of the importance of continually focusing on possible and likely biases in mainstream and internet media.

Featured Article:  Recently well known investor and regular blogger Marc Faber wrote a short article on the importance, when investing, trading, and generally thinking about world affairs, of understanding:

• different country specific perspectives; and,
• recognizing both reader and writer biases when reading and thinking about things found on the Internet in social media websites and blogs.

Mr. Faber said:  “if I were convinced of my views that gold is a desirable investment, I would wish to hear the views of people who are anti-gold. In other words, you want to have interactions with people that have precisely a different opinion than you and not with people that have the same opinion as you have.”

Commentary:  What Mr. Faber says is of critical importance to investors and traders currently and going forward:

• investors and traders (and everyone else for that matter) ought to print Mr. Faber’s statement and pin it to their wall where it is obvious, and where they can frequently read it;
• it is all too easy to look for like-minded persons who continuously reinforce one’s own views – a clear form of ‘lemmingism’, to coin a new word;
• Mr. Faber should have extended his comment on ‘different country specific perspectives’ to ‘different country specific perspectives, ideologies, and societal values’; and,
• smart people welcome and embrace those that constructively contradict their views.  Smart people then work to learn from those experiences, and amend their views as they deem appropriate after open-mindedly weighting those contradictory views.

As but one example in support of the latter point Ray Dalio, one of the world’s most successful investors/money managers (see Bridgewater Associates), is on record as saying he continuously has people challenge him, while he concurrently challenges himself, on whether he is wrong in his views.

Marc Faber: Traveling has become very expensive

Source:  Marc Faber Blog, April 21, 2012

Reading time:  2 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Spain Prepares Bail-Out For Bank

Overview:  Discusses May 7 Spanish Government announcement

Source:  Economy Watch, May 8, 2012

Reading time: 2 minutes

China’s first deep-water rig to drill in South China Sea

Overview:  Discusses China’s South China Sea deep-water drilling and estimated reserves

Source:  China.org, May 7, 2012

Reading time: 2 minutes

Today’s Unabridged E-mail includes four other ‘Speak For Themselves’ Headlines dealing with the following topics:

• UK big business payment timing;
• Yuan for Iranian oil;
• Declined U.S. stock trading; and,
• Chinese gold imports.

EU Extraordinary Summit Meeting

Why Read:  Because this is an indicator of the current state of Europe and Eurozone economic issues.

Featured Article:  An article today reports that the President of the European Union (Herman Van Rompuy) has called an ‘extraordinary’ meeting of the European Union Heads of State for ….. (continue reading) 

Commentary reading time 2 minutes.

Referenced article(s) reading time 1 minute.

U.S. Federal Shortfall

Why Read:  Because there seems to be an clear incongruity between the positive economic news reported in Q1 2012, and the data reported in the article featured in this commentary.

Featured Article:  An April 26 article reports, in circumstances where the U.S. Federal Government fiscal year ends September 30 that:

• the U.S. Federal Government budget deficit in fiscal H1 2012 was U.S.$779 billion, which was ….. (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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity

Marc Faber On Biased Views! is a post from: StockResearchPortal.com Blog

Why Read:  A Greek Newspaper article reports on the May 6 Greek election which lead to a splintered government.  Importantly, the article is a local Athens based commentary, as contrasted with commentary by persons outside of Greece.

Featured Article:  A commentary in an Athens newspaper on yesterday’s Greek election discusses what its author says is a circumstance where:

• “the voters destroyed the two-party political system, they fragmented the center and brought the extremes into the center of developments”;
• “Yesterday’s elections destroyed the political system of the past 38 years”; and,
• “If our politicians and all those who are involved in public life did not learn their lesson yesterday, we will fall into a cycle of conflict that will only end in catastrophe”.

Commentary:  In the aftermath of the May 6 elections in both Greece and France (see following commentary), and:

• the dissolution of the Netherlands Government and its pending September election;
• Spain’s ongoing economic problems; and,
• ongoing economic uncertainty in other Eurozone countries, notably Ireland, Italy and Portugal,

the Eurozone is in economic disarray.  Nothing good is likely to come of this, as it is likely that ‘economic Eurozone pennies will continue to drop’ going forward.  The French, Greek and Netherlands populaces are all strongly against austerity measures.  This is simply unrealistic – Peter can only be robbed so long to pay Paul before Peter either simply runs out of money, or decides to jump from a 50 story window.

In the aftermath of yesterday’s Eurozone election news the overnight (ET) Asian financial markets were down, as are the European financial markets this morning.  That said, the world is a more dangerous place in broad economic terms than it was last Friday – or better said, is more assuredly a more dangerous place in circumstances where actual events have crystallized and made what was evidently dangerous on Friday certainly dangerous on Monday.

Yesterday strikes back

Source:  Ekathimerini Newspaper (Athens), Nikos Konstandaras, May 7, 2012

Reading time:  3 minutes

France – No Austerity, More Socialism?

Why Read:  Because common sense dictates that what is going on in France and the Eurozone can’t work in the end.

Featured Article:  An article yesterday exclaims that Francois Hollande’s May 6 victory represents “a swing to the left at the heart of Europe that could start a pushback against German-led austerity”.  A second article published April 30 suggested that a Socialist Government in France could have a positive effect on America’s economic growth rate – presumably because a French Socialist Government would result in increased economic stimulus in France.

Commentary:  To make up a new ‘Yogi Berraism’: ‘An inevitable postponed is an inevitable’.  Or on the same vein, you can continue to pump a spinning top until your arm becomes so sore you can’t keep going – or, eventually the top ‘runs out of gas’ and ‘topples’ over.

Postponing economic failure through quantitative easing ultimately has to be a recipe for disaster.  Watch the Eurozone in particular, and the United Kingdom as well, over the next few months and years – particularly if you thought in 2008 and thereafter that Lehman Brothers was and still is a big deal.

Hollande’s Victory Ushers in New Era of Socialism

Source: The Fiscal Times, Lionel Laurent and Catherine Bremer, May 6, 2012

Reading time:  4 minutes

Also see:  What a Socialist France Would Mean for America

Source:  The Fiscal Times, Patrick Smith, April 30, 2012

Reading time:  4 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Election swing leaves Greece teetering

Overview:  Discusses Greek uncertainties in face of what will now be a new Coalition Government

Source:  Ekathimerini Newspaper (Athens), May 7, 2012

Reading time: 5 minutes

Greece must stick to reforms, says Germany

Overview:  Reports on German Chancellor Merkel’s Office comment on Greece in aftermath election.  Article title could have read ‘The Noose Tightens’

Source:  Ekathimerini Newspaper (Athens), May 7, 2012

Reading time: 1 minute

The Spanish Bank Bailout Begins

Overview:  Reports on the possibility, announced this morning, that Spain may use public funds into its banking system

Source:  The Zerohedge Blog, May 7, 2012

Reading time: 4 minutes

Greek election raises risk country will exit eurozone

Overview:  Reports on the possibility of Greece leaving the Eurozone within 18 months

Source:  The Financial Post, Jeffrey Donovan, May 7, 2012

Reading time: 4 minutes

Bank of England’s inflation fears put more QE in balance

Overview:  Reports consideration of more quantitative easing by Bank of England

Source:  The Telegraph, Roland Gribben and Philip Aldrick, May 7, 2012

Reading time: 3 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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity

Greece – From The Horse’s Mouth is a post from: StockResearchPortal.com Blog

Why Read:  Because if you participate in the financial markets directly or indirectly it is important that you understand the role earnings plays in acquisition analysis as contrasted with stock market analysis.

Featured Article:  An April 20 article by a Senior Editor at Lombardi Financial is titled Earnings Reflect Expectations – the Stock Market Is Fairly Valued.  The article goes on to suggest that based on quarterly earnings currently being reported and are expected to be reported for Q1 2012 that has just ended:

• those earnings “are a mixed bag”;
• “the stock market is holding up very well, because the earnings results aren’t really that stellar”;
• “the trend in corporate reporting so far this earnings season will continue”;
• “earnings are good, but not spectacular”;
• “the stock market reflects the current outlook from companies.  It is tepid”; and,
• “the stock market is appropriately valued … and a lot more upside from current levels is unlikely”.

Commentary:  Earnings are a public equities markets driver for a large number of analysts and financial market participants.  In the end the financial markets are ‘the financial markets’ and how those markets price stocks and hence, for financial market purposes, imply point in time values for companies – being the companies market capitalization – can’t be disregarded.   However, latest reported earnings are rife with conceptual issues from a number of perspectives, including:

• reported earnings are ‘accounting constructs’, and have built into them many subjective underlying accounting theories, reporting decisions, and quantifications that can skew earnings results for any given company from quarter to quarter, and from company to company within the same industry sector in the same financial reporting period;
• reported earnings are nothing more or less than ‘recent historical snapshots of operating and non-operating results’ that may prove to be not representative of future performance; and,
• value of a company’s shares at any given point in time is a measurement of the present value of the future expectations of all discretionary after-tax cash flow, not earnings, that company is expected to generated.  Discretionary after-tax cash flow is the amount a company is left with after expending maintenance capital  to invest in growth or provide a dividend (or other payout return) to its shareholders.  Broadly, the referenced present value calculation typically is based on an assumption that the company will generate positive discretionary cash flows to infinity (or at least as long as its operations are expected to continue – e.g. in part ‘mine life’ for a mining company).

This leaves ‘reported earnings’ as little but a simplistic and unreliable ‘value driver’ in the ‘real world’ of corporate merger and acquisition transactions.  The one caveat to this is that public company acquirers in their acquisition analysis do (or should) calculate the likely affect an acquisition will have on the acquirer’s post-acquisition reported earnings to ensure – to the extent possible – that the acquisition is ‘accretive’ to its then consolidated earnings.  Stated differently, the acquirer works to satisfy itself that it will achieve post-acquisition synergies that will result in the financial markets pricing the acquirer’s shares based on earnings analysis at an implied amount greater than the price the acquirer pays for the acquisition target.

While because as an investor you can’t disregard earnings reports because the market doesn’t, earnings reports are more relevant to short-term investments and trades, and less relevant to long-term investment strategies.

Don’t fail to consider that the current financial markets are ever more becoming, or so it seems, driven on a day/day pricing basis by algorithmic and non-algorithmic short-term traders – as contrasted as being driven by long-term holders.

Earnings Reflect Expectations – the Stock Market Is Fairly Valued

Source:  Profit Confidential, April 20, 2012

Reading time: 3 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

The Scope Of The Alberta Oil Sands Must Be Seen To Be Believed

Overview:  Report on the Alberta Oil Sands in pictures

Source:  Business Insider, Robert Johnson, April 28, 2012

Reading time: 4 minutes

A Return To Real Money

Overview:  Discussion of the role of U.S. Federal Reserve

Source:  Ahead of the Herd Blog, Richard Mills, April 29, 2012

Reading time: 4 minutes

Today’s Unabridged E-mail includes one other ‘Speak For Themselves’ Headline dealing with the following topic:

• European credit demand.

Today’s ‘Speak For Themselves Country Risk’ World Headlines

Why Read These Headlines:  To Save Time and Stay Informed on Country Risk Issues

Spain Finance Min: Communique Supports Spain Position on YPF

Overview:  Discusses G20 support of Spain in Repsol (YPF SA) matter

Source:  Fox News, April 20, 2012

Reading time: 2 minutes

Really Mr. Geithner?

Why Read:  To review and think about one more 50,000 foot commentary by a senior American civil servant that is reported on, but not questioned

Featured Article:  A Reuters article reports on statements it says were made by Timothy Geithner, U.S. Treasury Secretary, in an interview Friday, April 27.  Those statements included:

• “The U.S. financial system is in a very strong position to withstand ….. (continue reading)         

Commentary reading time 3 minutes.

Referenced article(s) reading time 3 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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity

Earnings Don’t Always Reflect Expectations is a post from: StockResearchPortal.com Blog

Why Read:  Because the referenced article and commentary are worth thinking about.

Featured Article:  In a recent article Eric Sprott and David Baker express the following opinions:

• they are not “seeing” a U.S. economic recovery;
• the U.S. housing new home sales and exiting home sales lead them to a conclusion that “the U.S. housing situation is still a bust”;
• U.S. unemployment numbers are not encouraging, and a view that U.S. jobs are recovering is not supported by U.S. tax receipts.  Broadly stated, U.S. tax receipts are just keeping up with inflation;
• U.S. durables goods orders have recently declined;
• China’s Purchasing Managers Index indicates that Chinese manufacturing has contracted for the last six months;
• the European economic situation continues to worsen; and,
• the emerging market BRICS are pushing for more say in International Monetary Fund matters.

Concurrently, Sprott and Baker say:

• “the physical gold market has been undergoing staggering change”, with escalated demand side that the market seems to be missing “the importance of”;
• they know of no sellers of physical gold “who can satiate that scale of new demand”;
• that there is a disconnect between the paper gold price and the physical gold price; and,
• that disconnect eventually with be overpowered by sheer momentum.

Commentary:  Sprott and Baker have rather nicely summarized economic matters in a way that most thinking people who follow macro-economic reports and announcements closely likely agree with.  Their comments on physical gold should be considered in the following contexts:

• the price of physical gold ought to trend positively in an environment experiencing:
• little, no, or negative real (inflation excluded) interest rates, and
• poor and volatile current economic conditions, particularly where near and longer term economic prospects are on the negative side of things, and even more particularly where real (inflation excluded) economic growth measured by GDP is low or even worse, negative; and,
• absent volatile paper gold trading markets, actual physical gold demand and supply ought to have a correlated effect on the price of physical gold.

Assuming no radical positive change in the European, and American macro-economic prospects, while traders taking profits and losses in ‘paper gold’ products may continue to create gold price volatility, over time if Sprott and Baker are right about physical gold demand overtaking physical gold supply, the physical gold price ought to trend upward from where it now is.

An important question is whether one is a trader of paper gold looking to make short term profits by timing the market, or a holder of physical gold as a safe haven – or is both a trader who looks to time the paper gold market volatility, and concurrently hedges his/her bets by owning physical gold.

Neither physical or paper gold ‘are for’ those who don’t believe they understand gold and the gold markets, or for those don’t have the stomach for gold price volatility in circumstances where the physical gold price does not appear to behave logically in the short term.

When Fundamentals No Longer Apply, Review the Fundamentals

Source:  Sprott Asset Management LP, Eric Sprott and David Baker, April 2012

Reading time: 5 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

OPEC: near record production, spare capacity a concern

Overview:  Discusses OPEC capacity constraints

Source:  Credit Writedowns Blog, April 26, 2012

Reading time: 3 minutes

A History of the World, BRIC by BRIC

Overview:  Discusses evolving importance of developing country economies

Source:  Energy Bulletin, Pepe Escobar, April 26, 2012

Reading time: 6 minutes

Today’s Unabridged E-mail includes four other ‘Speak For Themselves’ Headlines dealing with the following topics:

• Slowdown in U.S. economic growth;
• Prospective nickel prices;
• China copper storage; and,
• U.K property value prospects.

Today’s ‘Speak For Themselves Country Risk’ World Headlines

Why Read These Headlines:  To Save Time and Stay Informed on Country Risk Issues

Africa’s top copper producer won’t change mining codes, targeting compliance

Overview:  Discusses Zambian Government current position on better enforcing existing mining laws, rather than changing them

Source:  Mineweb (from Thomson Reuters), April 28, 2012

Reading time: 4 minutes

Peru – Major Gold Mining Project!

Why Read:  Because it is further evidence once again of escalating Country Risk issues – which should be an ever bigger ‘red flag’ for investors and traders.

Featured Article: Newmont’s $4.8 billion Cajamarca gold mining project in Northern Peru was suspended in early last December, following a worker strike and pending a review of environmental issues.  An April 28 article reports that a final decision on that project will be made….. (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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• Mining Cost Escalation – Impact?
• China Banking Camel In U.S. Tent?

Sprott On Economic Fundamentals (and Gold) is a post from: StockResearchPortal.com Blog

Why Read:  Because if there are signs of increasing momentum in economic deterioration in the Eurozone that needs to be recognized, and the possible consequences weighed.

Featured Articles:  Two articles published today and yesterday reported on:

• retail sales declines in Germany, France and Italy; and,
• S&P’s latest downgrade of Spanish debt from A to BBB+ (with a negative outlook).

According to the International Monetary Fund (as reported by Wikipedia), in 2011 Germany, France and Italy respectively were:

• the first, second and third largest ‘nominal (inflation included) GDP countries’ in the 17 country Eurozone;
• the fourth, fifth and eighth largest economies in the world measured by nominal GDP, respectively representing about 5.1%, 4.0% and 3.1% of the world’s nominal GDP in 2011; and,
• the Eurozone’s aggregate nominal GDP in 2011 was about 17% larger than that of the U.S., and was (viewed collectively) the largest GDP in the world (Eurozone – U.S.$17.6 trillion, U.S. – U.S.$15.1 trillion, World GDP U.S.$69.7 trillion).

Articles earlier this week reported on technical recession in both the United Kingdom (non-Eurozone) and Spain (Eurozone)

Commentary:  The reports on technical recession are hardly surprising.  On the other hand, the reported retail sales declines are perhaps somewhat more so, particularly for Germany and to some degree France.  That said, when this ‘retail sales drop information’ is combined with very recent news of reversion to technical recession in the United Kingdom and Spain:

• the question arises as to whether or not there an increasing rate of downward economic momentum in the Eurozone; and,
• if such downward momentum is increasing, the important supplementary question has to be “can increasing contagion risks for the Eurozone, with spill-over effects for developed (read in particular the United States) and developing countries (read in particular China), be far behind”?

No matter whether such downward momentum is increasing, it is hard to argue that this is not something important to think about.  Recall the example of the last small and insignificant (when viewed in isolation) snowflake that falls, proves to be the ‘straw that breaks the camel’s back’, and starts an avalanche.

Note that the four articles referenced in this article are all dated from Monday, April 23 to Friday, April 27, 2012.

For United Kingdom technical recession news, see U.K. Succumbs to First Double-Dip Recession Since 1970’s

Source:  Bloomberg, Jennifer Ryan, April 25, 2012

Reading time:  4 minutes

For Spain technical recession news, see Spain slips back into recession

Source:  The Globe and Mail, April 23, 2012

Reading time:  3 minutes.

Eurozone Retail Sales Plunge at Strongest Pace Since Late-2008; German Retail Sales Plunge Into Contraction; French Retail Sales Plunge at Record pace; Record Job Losses, Record Retail Plunge in Italy and Spain Long-Term Debt Lowered to BBB+ from A, With Negative Outlook; 100% Certain Conditions in Spain Worsen

Source:  Mish’s Global Economic Trend Analysis, Mike Shedlock, April 27 and 26, 2012 respectively

Reading time: each article 3 minutes

Today’s ‘Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Bernanke: Another Round of QE3 is Possible

Overview:  Brief comment and accompanying video

Source:  Wall Street Daily, April 26, 2012

Reading and viewing time: 4 minutes

Statistics, forecasts and austerity Britain

Overview:  Reports on IMF review of Spain’s financial system

Source:  FT.com Video, April 25, 2012

Viewing time: 5 minutes

Today’s Unabridged E-mail includes four other ‘Speak For Themselves’ Headlines dealing with the following topics:

• U.S. recovered jobs by industry;
• Uranium forecast;
• Declining U.S. Postal Service; and,
• U.S. ‘Mass-Affluent’ financial worries.

Another View On China Growth

Why Watch and Listen:  Because of the importance of China’s continued GDP growth to world economic recovery and growth

Featured Article (with accompanying video):  In an April 21 article Patrick Chovanec suggests that based on his ‘feet on the street’ view of things in Beijing, China’s official CPI, GDP and PMI numbers are disconnected from reality.  He suggests that growth China’s official statistics may be materially overstating China’s actual economic growth ….. (continue reading)        

Commentary reading time 3 minutes.

Referenced article(s) reading time 5 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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity

Decline Momentum Change In Eurozone? is a post from: StockResearchPortal.com Blog

Why Read:  Because among other things this article suggests that the International Monetary Fund is interested in taking a more direct role in financially assisting private enterprise

Featured Article:  An April 25 article reports that a recent IMF overview of Spain’s financial system has said the Spanish banking system “remains vulnerable” and needs:

• a capital infusion; and,
• a strategy to ‘quickly clear away’ a collapsing property bubble legacy, where bad debts have now reached U.S.$185 billion.

The article goes on to report:

• “there is no obvious way out of the dilemma”; and,
• importantly, the “the IMF wants the rules changed so it can lend directly to banks – and underwrite a rescue of the Spanish financial system without increasing Spain’s government debt.

Commentary:  Put Spanish bank bad debt of U.S.$185 billion in perspective by making the following simplistic comparisons between Spain and Canada:

• Spain’s population is 46 million, 35% larger than Canada’s population of 34 million;
• Spain’s 2012 Federal Deficit is targeted at 5.3% of GDP.  Spain’s 2011 GDP as estimated by the IMF was U.S.$1.5 trillion (from Wikipedia).  That suggests Spain’s 2012 Federal Deficit is targeted to be in the order of U.S.$80 billion;
• it is now estimated by some that Canada’s 2012 Federal Deficit will come in around Cdn$20 billion;
• assuming U.S.$/Cdn$ parity, that means Spain’s:
• 2012 Federal Deficit is about 4X that of Canada’s, and
• Spain’s reported property related bad debts held by Spanish bank’s is now about 9X the size of what may prove to be Canada’s current year fiscal deficit;
• concurrently, Spain’s current unemployment rate is reported at over 23% with its youth unemployment rate reported at over 51%; and,
• Canada’s comparative current unemployment rates are reported to be 7.4% and 14.7% respectively.

In Canada many are worried about the extent of the Federal Deficit, the unemployment rates, and what is broadly thought to be a residential housing price bubble.

The foregoing comparison is not intended to demonstrate ‘what good economic shape’ Canada is in, because while Canada arguably is in better economic and financial shape at a Federal level that many other developed countries, it has worrisome debt levels at a Provincial (read State) level in a number of its Provinces.  The comparison simply is made to show just how much worse Spain is by way of contrast of only three statistics.

To ‘make up a Yogi Berra-ism, ‘when something is inevitable it is inevitable’.  All the King’s horse’s and all the King’s men are hardly likely to be able to put ‘Spain back together again’ – as least as it was at the turn of this century.

That the IMF wants to take a more direct role in assisting the Spanish banks is interesting on one hand, and adds to worry on the other.  One wonders whether this is a clear signal on the part of the IMF that it is distrustful of providing funds to a (in this case, Spain’s) Government in circumstances that those funds may not find there way to the place the IMF intends?  If there is anything to that, and the rules were changed such that the IMF was allowed to lend directly to targeted public and private enterprise, that would change the IMF’s role and world economic influence considerably.

This is an article that you ought to read and think about.

Spanish banks ‘vulnerable’ and may neet public help, says IMF

Source:  The Washington Post, Howard Schneider, April 25, 2012

Reading time: 4 minutes

Also see the following related article which reports on potential changes that may be being considered to the Euro bailout fund that would see that fund being able to lend money directly to financial institutions.  Germany is reported as being opposed to this.

Euro Group Considers Direct Aid for (Spanish) Banks

Overview:  Reports on potential change to Euro bailout fund

Source:  Spiegel Online, April 26, 2012

Reading time: 3 minutes

Today’s ‘ Speak For Themselves’ World Headlines

Why Read These Headlines:  Save Time and Stay Informed.  These Headlines have been personally filtered this morning from over 1,200 articles canvassing economic and resource news

Greek central banker warns of break with euro zone

Overview:  Discusses comments made April 24 by Greek Central Bank Head

Source:  The Washington Post, Howard Schneider, April 24, 2012

Reading time: 5 minutes

Today’s Unabridged E-mail includes three other ‘Speak For Themselves’ Headlines dealing with the following topics:

• Bank of Canada report on Canadian house prices;
• Rare earth juniors; and,
• UK in recession.

China and Commodity Markets!

Why Read:  Because this is important, and vested interest writers don’t focus on this to nearly the degree they should

Featured Article:  An April 20 article reviews recent concerns over China’s 2012 GDP forecast growth rate (just over 8%), and the impact that concern (presumably among other things) has had on commodity prices.

Commentary:  The referenced article refers only to commodities generally, and not to specific commodities.  As such, it is too simplistic, but nonetheless worth reading.  The article concludes that ….. (continue reading)       

Commentary reading time 1 minutes.

Referenced article(s) reading time 5 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:

• An Accident Waiting to Happen, or ‘Ever Closer To The Cliff’!
• After Spain, is Italy Next?
• Spain and Spanish Bank Dilemma!
• China Banking Camel In U.S. Tent?
• No Alternative To Austerity

Spanish Banks – IMF Report is a post from: StockResearchPortal.com Blog