Retail Investors Celebrate 32 Consecutive Weeks Of Equity Outflows By Pulling Money Out Of Taxable Bond Funds As Well

That ICI has just confirmed the 32nd consecutive outflow from domestic equity mutual funds is not surprising.

The five big questions facing investors in 2011

It's the time of year when everyone comes out with their forecasts for 2011 – and we've got plenty of them for you in the current issue of MoneyWeek magazine. For now, let's look at five of the big issues that investors will have to cope with next year.

Should you buy a property to protect against inflation?

People are starting to get worried about inflation. Consumer price index (CPI) inflation – the official measure – is sitting at 3.3%. But the most recent survey from the Bank of England showed that people believe inflation is more like 3.9%. And they reckon it will stay at that level for the next 12 months. That's the highest expectations have been since 2008. In February, consumers thought inflation would be just 2.5% over the next 12 months. The big danger with expectations is that they may become reality, as people demand higher wages to match, and companies push up prices as a result. So are we going to see interest rates rising soon? The Confederation of British Industry (CBI) reckons so. In fact, the CBI reckons that the Bank will start hiking rates within the next six months. But are they right? And if inflation is set to head higher, how best can you protect yourself?

The best ways to play emerging markets

So we can’t be blamed for thinking about more exotic climes. And it seems that’s where the money is heading as well. Nearly 50% of institutional investors plan to increase their exposure to emerging markets in the next 12 months, according to a recent Deutsche Bank survey reported in the FT. That’s the highest figure for any asset class. We all know what happens when an asset class gets too popular. The bubble tends to burst. But when? That’s the catch…

Take a long-term view on emerging markets

Investment is sometimes a case of getting one or two big decisions right.

Many black swans, but Vince Cable is the turkey

In a year of big surprises, how long before the Business Secretary is stuffed, asks Jeff Randall.

Record spike in EMU default risk on Portugal downgrade and Greek restructuring scare

The cost of default insurance on eurozone bonds has surged to an all-time high on reports that Greece is preparing the way for a sovereign debt restructuring after 2013, with tacit support from the EU authorities.

Citigroup fears fresh wave of sovereign defaults and bank failures in eurozone

Citigroup has warned of a fresh wave of bank failures and a string of sovereign defaults in Europe unless EU leaders come up with a credible response to the crisis.

What Spain's woes mean for the euro

I'm starting to think there's a bit of a conspiracy going on in the global markets just now. Europe and the US are the key players. Every time investors get too worried about the problems occurring on one side of the Atlantic, the authorities on the other side stick their heads up and shout: "Hey, forget them! We're in much worse shape!" As economics professor Michael Spence puts it on Project-Syndicate.org, "capital markets have become schizophrenic, with investment rushing back and forth across the Atlantic in response to contagion risk in Europe and quantitative easing in the United States." This week, the big story has been the spike in US Treasury bond yields. There have also been rumblings of fear over how US cities are going to fund themselves in the near future. But now it looks as though the worry pendulum might be about to swing back to Europe once more...

Six reasons to steer clear of UK commercial property

“Buy like hell”. That was the advice from one investment veteran last week. He wasn’t talking about shares, bonds or commodities. He wasn’t even talking about some wacky new product thought up by the City’s black box brigade. No, he was telling punters to pile into good old boring British commercial property. And you can see why he might be tempted. Despite a rally in commercial property prices over recent months, values are still a long way below the peaks of three years ago. So is his advice right? Or should you wait a while longer?

China and India's latest love-in raises serious issues for the West

The dragon and the elephant should tango!" So said Wen Jiabao last week during a rare visit to India. The Chinese premier employed some uncharacteristically colourful language to convey an unusual idea – that of Sino-Indian co-operation.

Staying together in the eurozone could turn out worse

The European Council meets this week. On the agenda is the establishment of a permanent crisis resolution mechanism for the eurozone to replace the European Financial Stability Facility (or EFSF), which expires in 2013.

European Central Bank arms itself for Spanish crisis

The European Central Bank (ECB) is to double its capital base to cope with "credit risk" stemming from the eurozone debt crisis, paving the way for direct action to shore up the Spanish debt markets if necessary.

Gold jewellery loses glister as prices surge

Please respect FT.com's ts&cs and copyright policy which allow you to: share links; copy content for personal use; & redistribute limited extracts. Email ftsales.support@ft.com to buy additional rights or use this link to reference the article - http://www.ft.com/cms/s/0/b52d834c-03bd-11e0-8c3f-00144feabdc0.html#ixzz17r0MIuHM The UK’s Royal Mint is as busy as it has ever been in its 1,000-year history. Sales of the popular gold sovereign coin have surged 400 per cent from last year, and November was “the biggest single month we’ve ever had in our entire history”, says Dave Knight, head of commemorative coins.

U.S. Home Values to Drop by $1.7 Trillion This Year, Zillow Says

U.S. home values are poised to drop by more than $1.7 trillion this year amid rising foreclosures and the expiration of homebuyer tax credits, said Zillow Inc., a closely held provider of home price data. This year’s estimated decline, more than the $1.05 trillion drop in 2009, brings the loss since the June 2006 home-price peak to $9 trillion, the Seattle-based company said today in a statement.

Ron Paul, Author of ‘End the Fed,’ to Lead Fed Panel

Representative Ron Paul, Texas Republican and author of “End the Fed,” will take control of the House subcommittee that oversees the Federal Reserve. House Financial Services chairman-elect Spencer Bachus, an Alabama Republican, selected Paul, 75, to lead the panel’s domestic monetary policy subcommittee when their party takes the House majority next month, the committee chairman said today.

Why US equities could be hard to beat in 2011

Hosting a debate between a panel of fund managers and asset allocators recently, I was struck by the unanimity of their views on what would be the best-performing geographic area next year.

Quantitative Easing: The Real Reason the Fed May Go For QE3

Ben Bernanke has a secret. And it's a secret that very likely terrifies him and his policymaking brethren at the U.S. Federal Reserve. That secret has to do with his latest round of "quantitative easing," a liquidity-push known as "QE2." What Bernanke & Co. don't want Americans to know is that painfully slow growth - or even a double-dip recession - isn't their greatest fear. Bernanke's greatest fear is that without this liquidity, one or more of the massive, already-bailed-out U.S. banks could stumble and once again undermine the global financial system. And this time around, the outcome would be much, much uglier.

Is this the end of the great bond bull market?

What's going on in the world's government bond markets? All of a sudden, yields are rising fast again. In other words, sovereign bond prices are plunging. And we're not just talking about the likes of Ireland, where the yield surge has been driven by the recent bailout. (Yesterday, by the way, Fitch Ratings slashed the Irish credit rating for the second time in two months). No, we're talking about the planet's big boys – or should I say big borrowers. You can now get between 0.5% and 0.75% a year more by buying a ten-year US, UK or German government bond than you could two months ago. Even yields on Japanese sovereign debt, traditionally the lowest of the lot, have climbed sharply. So are we now finally seeing the end of the great long-term government bond bull market? If so, why – and what's next?

The scramble for physical metal intensifies

The scramble for physical gold and silver is intensifying. People increasingly want to own the real thing, and not some paper substitute, all of which come with counterparty risk. This conclusion is apparent from the following two charts of gold and silver forwards, which are based on data made available by the London Bullion Market Association through November 24th (the most recent data available).

Goldman: These Are The 5 Reasons The Economy Now Looks Way Better

Goldman Sachs revised their growth forecast higher for 2011 this week, from 2.0% GDP growth for the year to 2.7% growth (via Zero Hedge). This new bullishness is built on a series of factors, centered on an improving jobs market and a better situation in manufacturing. And while yesterday's weak jobs report might have dimmed immediate hopes, Goldman, and top economist Jan Hatzius, remain confident things are looking better for 2011.

Is U.S. Making Emerging Nations Stronger?

Why is the rate of inflation so low in the United States when the government has pumped huge amounts of debt into the country and the Federal Reserve has loaded the financial system with large amounts of liquidity? The same question was asked in the 1990s. Where was the United States inflation? The answer for the 1990s… and for the present time period… is that the United States has exported inflation to the rest of the world, more specifically, Asia. As the accompanying chart shows, inflation seems to be heading up in Asia… as it is also heading up in many other emerging nations. As reported in the LEX column of The Financial Times yesterday, global inflation has seemingly bifurcated. In the developed countries the current inflation rate is below 2 percent (Australia and the UK are exceptions). Morgan Stanley expects a 1.5 percent rate of growth for the wealthier countries in 2010. By contrast, the emerging market inflation rate is about three times higher—expected at 5.4 percent in 2010…

German 2 Year Auction Fails By 20% Of Notional As Rush From Government Paper Intensifies

There is only so long that the Bundesbank can keep ignoring the fact that it has recently started piling on failed auction after failed auction. Today, Germany tried to sell €5 billion in 2 Year 1% Schatz notes. And while the official tally on the auction was a 1.1 Bid To Cover at a 0.92% average yield, just above our own 3 Year auction yesterday, (and a drop from the 1.4 previously) this was yet another failed auction, as the bank managed to get only €4.33 billion in competitive and non-competitive bids. The kicker: the Bundesbank retained €995 million of the issue, a whopping 20% of the proposed issue size - this is the amount it could not find any buyers for, and the deficit to what have been a non-failed auction. In other words, after the entire world was rushing to buy German paper, suddenly there is nobody willing to get in.

Meet The 35 Foreign Banks That Got Bailed Out By The Fed (And This Is Just The CPFF Banks)

One may be forgiven to believe that via its FX liquidity swap lines the Fed only bailed out foreign Central Banks, which in turn took the money and funded their own banks. It turns out that is only half the story: we now know the Fed also acted in a secondary bail out capacity, providing over $350 billion in short term funding exclusively to 35 foreign banks, of which the biggest beneficiaries were UBS, Dexia and BNP. Since the funding provided was in the form of ultra-short maturity commercial paper it was essentially equivalent to cash funding. In other words, between October 27, 2008 and August 6, 2009, the Fed spent $350 billion in taxpayer funds to save 35 foreign banks.

The smart money is betting against China

here's no country in the world that splits investment opinion more than China. Optimists see it as the world's saviour. After the credit crunch and Great Recession, China's rapid expansion was one of the main factors that dragged the planet back from the brink. While the bulls may expect growth to slow a bit, they still reckon it'll continue at a sustainable pace. And while China's stock market hasn't set the world alight of late, they believe it's just a matter of time before it takes off again. But comforting though it may be, we find it hard to take this argument at face value. There are several reasons why China could soon face a raft of problems, some of which could turn very nasty. And that could be a real threat to the global economy...

Asia Forecast: High Growth Rates Will Create Top Profit Opportunities For 2011

While some individual Latin American markets have outpaced their Asian counterparts, the fact is that the 10.9% return of the overall MSCI Asia Index outdistanced the 10.3% return of the "Americas" region. Investors can expect more of the same in the New Year. The fact is that the Asian region - including Australia and New Zealand - was a profit powerhouse in 2010. And Asia's prospects for 2011 are even brighter: * It's where a great majority of the world's growth is taking place. * And it's where investors can reap their biggest profits - if they pick the right investments in the best Asian markets.

Investing in the Americas: Natural Resource Prices Will Be Key to 2011 Profits

Whether you win or lose on your Americas-related investments in 2011 will come down to a single factor - natural-resource prices. If the prices of oil, gold, copper and other natural resources are high, the hideous flaws in the economies of a number of the countries north and south of the U.S. border will remain hidden behind, as if by magic. But if resource prices plummet, then even some of the best-run countries in North and South America will probably stumble a bit - and several will be revealed as true economic basket cases. When we refer to "the Americas," we're talking about all the countries in North, Central and South America - with the United States excluded. There's a great divergence in potential. So let's begin our journey with Latin America.

A back-door bail-out for Europe?

Earlier this week, the president of the European Central Bank, Jean-Claude Trichet, said that we shouldn't underestimate the determination of the eurozone's leaders to hold everything together. On the face of it, he's happy to test that determination to its limits. Investors had assumed that Monsieur Trichet's comments meant that he'd be ready with a great big bail-out. Instead, he basically said that although the ECB won't be withdrawing 'temporary' support for troubled banks or countries any time soon, it's still up to countries to sort out their finances in the longer run. There is a "clear need" for governments to "strengthen confidence in public finances."

Global bond rout deepens on US fiscal worries

Agreement in Washington on a fresh fiscal package has set off dramatic rise in yields of US Treasuries and bonds across the world, threatening to short-circuit any benefits of stimulus. The bond rout raises concerns that the US authorities may be losing control over events.

We approach a defining moment for Europe

Germany will not abandon the no bail-out clause – a big decision looms for the EU, says Jeremy Warner.

A "Who Is Who" Of Countries About To Fund The IMF's Bail Out Of Europe

When back in April we wrote about the huge expansion in the IMF's New Arrangement to Borrow (NAB) multilateral facility (which was expanded from $50 billion to over $550 billion), one of our observations was that "Funny money will galore. At this point nobody will allow anyone or anything to fail." And since all of Europe is about to be bailed out by the now insolvent ECB and the still somewhat solvent IMF, it strikes us as an opportune time to recall just who will bear the cost of this pan-European rescue. Surely, by now even idiots realize since the ECB is bailing out Europe, it is really bailing out itself, in a process described beautifully by Sean Corrigan recently, and any incremental money coming from ECB member countries will really go to themselves, and therefore its "new capital" contribution can be completely ignored.

Hungary Follows Argentina in Pension-Fund Ultimatum, `Nightmare' for Some

Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.

MarketClub Is gold stuck between a rock and a hard place?

Short Video

Time-Tested Wisdom: For Commodity Bulls, 'Don't Fight the Fed' Becomes 'Don't Fight Beijing'

The big story in the week that was (besides the customary Black Friday trample-fests)? “Greece Part II: Eurozone sovereign debt crisis revisited.” As such, the Captain Obvious award goes to the NYT for pointing out that a bailout of Spain — were such even feasible — would test Europe’s finances. (Nah, ya think?) Funny, though, how the big driver often winds up being the thing less talked about. And right now, there is very little focus on what’s happening in China. The old Federal Reserve rule is “three steps and a stumble,” meaning, when the Fed hikes rates three times, look out below. (Basic rationale: As interest rates go up, margin and loan service costs go up. Rate-of-return hurdles go up. Yields on safe haven debt instruments become more competitive. All this happens with risk appetite in a ‘peaking’ stage, and the bloom comes off the speculative rose.) So if “Don’t Fight the Fed” counts as time-tested wisdom, how about “Don’t Fight Beijing?”

Contagion strikes Italy as Ireland bail-out fails to calm markets

The EU-IMF rescue for Ireland has failed to restore to confidence in the eurozone debt markets, leading instead to a dramatic surge in bond yields across half the currency bloc.

How to profit as German consumers start spending again

The future of the global economy depends on rebalancing, we're told. Countries that had consumer booms have seen those turn to busts. Now they need to become more productive. And countries that have so far been driven by exports will need to encourage domestic consumption, as their overseas customers stop spending. In Britain, our hopes hang on the manufacturing sector. And there are some signs that we are at least nudging the economy in that direction. Manufacturing has certainly been one of the healthiest sectors over the past year. But there's another rebalancing story in Europe that's rather more convincing.

The euro has further to fall – here's why

Rushed Sunday night deals designed to soothe markets before they open on a Monday morning – it's like the autumn of 2008 all over again. Last night, Ireland's bail-out was finally agreed and signed off. The country will get €85bn as expected. €35bn of that will go on propping up the banking system. The other €50bn goes on sorting out government spending. No big surprises there. Perhaps more importantly, the eurozone's leaders have decided on an outline for a permanent 'bail-out' fund. You may remember that this latest bout of panic came about because Germany had decided that in the future, bondholders should – shock, horror – share some sort of responsibility for their careless decisions to fund irresponsible banks.

Germany faces its awful choice as Spain wobbles

Desperate moments call for desperate measures. In June 1940, the British War Cabinet led by Winston Churchill offered a total national merger to a shattered France.

Juniors vs. seniors

Has the gold market become overheated and thereby vulnerable to a sharp decline?

Putin Envisions a Russia-EU Free Trade Zone

Russian Prime Minister Vladimir Putin would like to see a free trade agreement between the European Union and Russia. In a Thursday editorial for a German newspaper, he describes his vision of "a unified continental market with a capacity worth trillions of euros."

It's Official: There Is Not Enough Money To Bail Out Spain

It seems that the European bailout buck will stop with Portugal for one simple reason: when Europe created the EFSF it did not think it would need to serially bail out everyone; now the EFSF does not have enough money to cover a bailout of Spain. From Dow Jones: "The European emergency fund, promoted as having the financial firepower to douse a financial crisis in the euro zone, may not even have enough money to cover a bailout of Spain. "[The fund] will be very close to the line, it will be precarious and it won't leave anything for anybody else," said Whitney Debevoise, a sovereign-debt lawyer with Arnold Porter and former World Bank executive director." Of course, if and when Spain is bailed out, other bail outs will be irrelevant, as at that point the vigilantes will focus squarely on Germany. At that moment, nothing less than a complete dissolution of the currency union and an unmitigated monetization ala Weimar will save what is left of the productive powers remaining in Europe. 

What a Spanish bail-out would mean for investors

Bail-outs just don't buy the sort of relief they used to. Ireland has accepted as much as £77bn to pay its bills and prop up its banking sector. Yet markets aren't convinced it's enough. Irish ten-year government bond yields topped 9% yesterday. That's the highest level they've reached so far in this growing crisis. More worryingly, other European countries with big borrowings also saw their sovereign bonds take a further pounding. That's bad news. The whole point of helping the Irish was to stop investors from panicking about the rest of the eurozone. As things stand, Europe probably has enough money left in the emergency pot to bail-out Portugal. But if the firebreak fails, the next economy in the market's sights is way too big to save: Spain…

Are austerity measures really as harsh as they seem?

Ireland doesn't matter. That's the message we got from the markets yesterday. Even as the country announced its huge new austerity budget, markets around the world rebounded. It's probably only to be expected. Markets are meant to be discounting mechanisms after all. What with strong economic data from Germany and some upbeat news on US joblessness, investors decided they'd had enough of the Irish story for now. The problems will be back in the news again before too long. And markets are likely to get fresh fits of the jitters as other countries come under the spotlight.

Goldman Sachs' Jim O'Neill on the European debt crisis, America, the dollar, gold and the global economy

Jim O'Neill, the former Goldman Sachs chief economist and now chairman of its $823bn (£528bn) asset management division, is optimistic that the West can emerge from its recent troubles and grow as much as emerging markets.

Is inflation now beyond the Bank's control?

Mervyn King is powerless to halt the damage to savings and spending power, says Jeremy Warner.

Jailed counterfeiters aren't a patch on the Bank of England

The British and US governments are printing money to create inflation – to reduce their debts, says Jeff Randall.

EU rescue costs start to threaten Germany itself

The escalating debt crisis on the eurozone periphery is starting to contaminate the creditworthiness of Germany and the core states of monetary union.

James Turk - Gold Separating From the Dollar

With gold and silver consolidating recent gains, King World News interviewed James Turk out of London. When asked about the action in both gold and silver Turk stated, “I think the important point today is that gold has moved back above its short-term moving averages. This should bring a great deal more buying into the market. I was very impressed today that gold was strong in spite of the fact that the US dollar was up a full point. Jim Sinclair has been bringing up this point, and it looks like he nailed gold separating from the dollar in terms of the action.”

EU must abandon bailout this madness

Both John Redwood and Douglas Carswell are accomplished analysts of events who make worthy leaders of the Tory backbench revolt against Britain's planned contribution to the Irish bail-out. They tend to be right on many things, but on this issue, they are substantially wrong.

Spain and Portugal under fire as bond spreads hit record

Borrowing costs for Portugal and Spain have surged to danger levels on fears that Europe's leaders are losing political control of the Irish crisis and have yet to agree on a coherent plan to tackle the eurozone's deeper debt woes.

Ireland Set For Majority Stakes in Leading Banks

Ireland is set to take a majority stake in top lender Bank of Ireland as part of a massive international bailout that will effectively give the state full ownership of the country's two other biggest banks. Dublin, Ireland Firecrest Picture | Robert Harding | Getty Images Dublin, Ireland The European Union and International Monetary Fund (IMF) have agreed a bailout of Ireland to shore up its banks and give them access to cheaper state funding.

Merkel: EU Needs Courage to Make Investors Share Risk

German Chancellor Angela Merkel said on Wednesday European politicians needed the "courage" to make private investors share in the risk of future debt crises in the euro zone and show financial markets who is in charge.

Have stock markets already topped out?

I think we've seen the top. It came on Bonfire Night, in the aftermath of Federal Reserve chief Ben Bernanke's quantitative easing announcement – the latest bout of dollar-printing. 5,900 is the number for the FTSE. 11,450 for the Dow. 1,225 for the S&P 500.

Ireland bail-out: British banks hit as Irish rescue falters

British banks lost billions of pounds in value on Monday after the Irish bail-out was thrown into jeopardy over concerns that the country's government might collapse before a rescue deal can be agreed.

Gold, Silver Set to Beat Farm Commodities in 2011, Societe Generale Says

Palladium, gold and silver will extend their rallies next year and investors should remain overweight in precious metals, which will outperform farm products including sugar, according to Societe Generale SA.

George Soros - Conditions Ideal for Gold to Rise

George Soros is at it again with more comments on the gold market. This time he admits that conditions are ideal for gold to rise. He claims that the actual deflationary pressures combined with fears of inflation will continue to propel gold higher. He also claims that gold will go parabolic before the bull market ends.

China Allows Yuan to Start Trading Against Ruble

China started allowing the yuan to trade against the Russian ruble from today in the interbank market as policy makers promote the currency’s use in global trade and finance.

Can the Euro Still Be Saved?

The countries of the euro zone are hopelessly divided over the question of how to save the currency in the long term. Bailouts for individual countries like Ireland and Greece can only be a temporary solution. Meanwhile, an internal paper drawn up by the German government has revealed Berlin's plans for forcing private-sector investors to take their share of losses in future crises.

Debt Delenda Est

The subject is debt; it needs to go away.

Chinese inflation is about to hit Britain

All eyes were on the eurozone yesterday. It looks like Ireland will now need an international bail-out worth up to 60% of its entire economy. And already investors are trying to work out who else will be getting in the queue for emergency cash. But Ireland is by no means the last of our worries. Over in Asia, another major problem is brewing up. And this could be at least as troublesome for the UK as the eurozone's woes.

Where is half of world's population located?

Long-term real growth in US GDP

Long term real growth in US GDP (Log Scale)

Bernanke defends bond-purchase plan, warns China

Bernanke defends bond-purchase plan, warns China

Pollitt & Co

The Saturated Sponge

Chinese Researchers Find Official Statistics Massively Understating Inflation .

With Chinese official inflation accelerating, and the government rushing to implement price controls for food, the inflation statistics themselves are now coming under far more intense scrutiny than before. And failing. Two weeks ago, a Chinese think tank said that official data had been understating inflation by 7%.

How Gold Performs During Periods of Deflation, Disinflation, Runaway Stagflation and Hyperinflation

Amid the global crisis in confidence, investors seem to be rediscovering the fact that gold has been used as money for thousands of years. In periods where black swans are no singular occurrences but are practically coming in flocks, the status of gold as a safe haven has yet again proven its worth. - Ronald-Peter Stoferle, The Erste Group

Ireland accepts a bail-out – who'll be next?

Ireland has succumbed to the inevitable. In agreeing to a bail-out, Ireland has become the second eurozone domino to topple in the space of seven months. We don't yet know the exact details of the bail-out. They're still being hammered out. And for now, it looks as though markets have got their risk appetite back. Commodities are up and Asian markets closed higher this morning. But we saw the same reaction after Greece. And just a few months later, we're back with another bail-out. How long before the next domino topples?

Ireland bail-out: Markets brand rescue package a failure due to lack of detail

Ireland's bail-out had been branded a failure by the markets owing to the lack of detail on the multi-billion euro loan

Portugal next as EMU's Máquina Infernal keeps ticking

The Portuguese seemed baffled - and pained - that investors should link their country in any way with Greece or Ireland. I am afraid they must come to terms very soon with some unpleasant facts.

Why Britain must participate in the Irish rescue

Should Britain be contributing to the Irish rescue? John Redwood argues that it would be better to apply the money to helping Ireland leave the euro than to propping it up, and on some level he’s plainly got a point. The mooted £7bn looks a scandalous use of money in the midst of an austerity programme.

Ireland's not unlucky, just an inevitable victim of the euro project

It might seem tempting to believe that the cruel fate which has befallen Ireland is the result of outrageous fortune – yet another "unforeseeable" event hitting the financial system. But it is not.

Does QE really stimulate economic activity?

Earlier this month the Federal Reserve announced its latest round of quantitative easing, long ago dubbed QE, but it should be called by what it really is – money printing. The Fed buys US government debt and turns it into currency. The process is somewhat arcane, but very simple at its core.

China eyes price controls to fight inflation

China price controls

Borrowing Needs as percentage of GDP

Portuguese Foreign Minister Says Country May Need To Leave Euro

Portuguese foreign minister Luis Amado has suggested his country might need to leave the eurozone if it cannot come to agreement on an austerity budget, according to Expresso (via WSJ.com). According to the Wall Street Journal's translation, Amado says that Portugal may face, "a scenario of exit from the eurozone." This comment may not seem like much, but it is evidence that fringe eurozone members are considering whether they should be in the currency union at all. Portugal has been unable to build a government coalition capable of passing the sort of cuts ECB officials are calling for, putting their membership at risk.

The 20 Cities With The Most Underwater Homes

The scariest number for anyone invested in the real estate market is this: 23.2%. That's the record-high share of mortgages that are now underwater, as estimated by Zillow. Negative equity is the prime factor driving a record number of mortgage holders into delinquency. Delinquencies will lead to foreclosures, which will drive down home prices, creating more negative equity -- a very dangerous cycle. In some parts of America, a gob smacking percentage of homes are underwater. In Las Vegas, for instance, four out of five mortgages are now underwater.

Are You Taking a “No Brainer” or “Head in the Sand” Approach to Investing in Gold and Silver?

It is genuinely amazing that so many economists and investment professionals continue to promote ‘business as usual’ investment advice. Their clients will surely pay a steep price for this ‘head in the sand’ approach to investing.

Open Letter to Ben Bernanke

The following is the text of an open letter to Federal Reserve Chairman Ben Bernanke signed by several economists, along with investors and political strategists, most of them close to Republicans

High Unemployment Not Structural Problem

Fears high unemployment levels are structural in nature and beyond the aid of monetary policy are wrong, a new paper from the Federal Reserve Bank of San Francisco argues.

Contagion hits Portugal as Ireland dithers on rescue

The EU authorities have begun to vent their fury against Ireland over its refusal to accept a financial rescue, fearing that the crisis will engulf Portugal and Spain unless confidence is restored immediately to eurozone bond markets.

EU puts pressure on Ireland to accept bail-out

Informal discussions on a new EU bail-out of up to €90bn (£77bn) for Ireland intensified on Sunday amid fears of renewed nervousness when financial markets open Monday.

Ireland denies €60bn bail-out talk as EU puts on pressure

The Irish Government has been forced to make a second denial in two days that it is preparing to go to the EU for a multi-billion euro bail-out.

summit Barack Obama closes G20 with pop at China over trade

US president Barack Obama took a swipe at China's currency policy after G20 leaders failed to resolve tensions running high over global trade imbalances.

Germany blamed for Irish debt soar

Ireland pointed the finger at Germany for stoking fears that holders of government bonds could be forced to suffer losses as the cost of Ireland's borrowing hit fresh highs.

Chile: The One Emerging Market That Investors Can't Afford to Ignore in 2011

When I review each of the world's emerging markets in order to decide which ones to buy in 2011, I start with two questions: * Is the market cheap? * And has it under-performed over the past year? If the answer is "yes" for both those questions, that market is much more likely to get my vote. But with every rule, there are also exceptions. As we will see.

The eurozone's woes go far deeper than Ireland

It seems we're not much closer to a concrete resolution of Ireland's debt problems. No aid has been accepted by the country as yet. However, some sort of bail-out does look inevitable. A crack squad of fixers from Europe and the International Monetary Fund (IMF) are heading to Ireland for 'talks'. The desired fudge – for Ireland – is a deal that can be painted as a bail-out for the banks, rather than for the state. Obviously, the reason the state is in this mess, is because the government rather foolhardily committed to stand behind the banks back in 2008. But this is politics. The Irish government needs to consider how losing control over its economic policies would play with the voters. What makes this situation difficult is that they're not the only ones who need to fret about what the voters think.

LNG Is the Future of Energy – And North America is the "New Saudi Arabia"

Sometimes the most important impact on a raw material commodity comes less from its actual extraction and more from how product is introduced into new markets. Indeed, that is becoming the next major development in North American natural gas. The expansion in liquefied natural gas (LNG) exports may well hold the key to turning a glut into advancing profit.

How to protect your wealth from stagflation

The Federal Reserve's attempt to pump more inflation into the US economy by pushing up asset prices looks as though it might backfire. Ben Bernanke has already admitted that he's relying on 'the wealth effect' to help consumer confidence. The argument goes that if stock prices are higher, people feel richer, so they spend more money.

Grading the Deficit Commission: Although New Proposal Cuts Billions in Federal Spending, The Shortfall Remains

The two leaders of U.S. President Barack Obama's Deficit Commission Wednesday produced a proposal for deficit cuts that slaughtered a lot of budgetary "sacred cows" and cut $3.8 trillion off the deficit over the next 10 years. And the cuts were even made in just the right ratio – with $3 of spending cuts for every $1 of tax increases. But if there was ever a proposal that exemplified that saying "the devil is in the details," this surely is it – for everyone will find something in here that they hate. Let's take a look at the bits that I hate – after which I'll point out the proposal's strong points, before giving the commission leaders my final grade for their work.

Chinese Inflation Just Hit Its Fastest Pace In Two Years.

Chinese consumer price index grew 4.4% last month, its fastest pace in two years.

The Gold Mining Stocks are Still Cheap

It has been just one month since I stated on King World News that the gold mining stocks had begun a new bull market. The XAU Index of mining stocks closed that day at a new record high of 206.79. It closed yesterday at 220.17, up 6.5% over this period. That is a tremendous gain in such a short period of time. But do not let that spectacular performance keep you from buying and accumulating my recommended mining stocks. They remain good value, as is clear from the following chart that measures the XAU Index in terms of gold.

China Downgrades US Again, From AA To A+, Outlook Negative, Sees "Long-Term Recession", Blasts QE2, Expects Creditor Retaliation

Dagong has downgraded the local and foreign currency long term sovereign credit rating of the United States of America (hereinafter referred to as “United States” ) from “AA” to “A+“, which reflects its deteriorating debt repayment capability and drastic decline of the government’s intention of debt repayment. The serious defects in the United States economic development and management model will lead to the long-term recession of its national economy, fundamentally lowering the national solvency. The new round of quantitative easing monetary policy adopted by the Federal Reserve has brought about an obvious trend of depreciation of the U.S. dollar, and the continuation and deepening of credit crisis in the U.S. Such a move entirely encroaches on the interests of the creditors, indicating the decline of the U.S. government’s intention of debt repayment. Analysis shows that the crisis confronting the U.S. cannot be ultimately resolved through currency depreciation. On the contrary, it is likely that an overall crisis might be triggered by the U.S. government’s policy to continuously depreciate the U.S. dollar against the will of creditors.

Rampant Inflation is Coming – As Soon As 2011!!

There are 3 major reasons rampant inflation is headed our way The only real question is how far down the road are we going to get before it happens.

When Investing in Latin America, Politics Point the Way to Profits

Brazil's election win by the Workers Party candidate Dilma Rousseff has cast a dark shadow over the investment prospects of that long-fashionable "BRIC" economy. And it has underscored an important lesson for investors: In Latin America, the political climate is really the No. 1 factor in determining where to invest for the long run. In short, when looking to invest in Latin America, let politics be your guide to profits.

Ireland's woes could be good news for the pound

Candidates for "quote of the week" are coming in thick and fast this morning. There's Alan Greenspan, the world's least self-aware man, gently berating the US for "pursuing a policy of currency weakening", in the Financial Times this morning. You may remember that a strong dollar policy was not an obvious feature of Greenspan's regime at the Federal Reserve. Then there's our own Mervyn King. As he unveiled the latest quarterly inflation report, the Bank of England governor noted that in two years' time, it's "about as likely that inflation will be above the target as below it". In other words, 'we haven't a clue, but we're getting a bit worried that this deflation thing was a complete red herring'. But I think the winner, for sheer black comedy, has to be this cracker from George Papaconstantinou, the Greek finance minister (thanks to the FT's Short View column for this). In attempting to reassure the world that Greece is not about to go bust, he said: "Greece is not Ireland". I couldn't swear to it, but I'm pretty sure an Irish official said something similar during the Greek crisis earlier this year. Ah, sweet irony.

Mervyn King urges G20 leaders to agree over trade row

Mervyn King has joined President Barack Obama in calling for G20 leaders to agree united action to tackle global trade imbalances at the Seoul summit starting today.

Crunch time approaches for world economy

There was a belated admission from Mervyn King on Wednesday; ignore the Inflation Report, he seemed to be saying, because its forecasts may amount to no more than tomorrow's chip paper.

IMF warns austerity measures may have to be reconsidered

Government austerity measures may have to be rethought if the recovery slows, the International Monetary Fund (IMF) has warned.

Ron Paul Is About to Totally Revolutionize the House Monetary Policy Panel

Odds are you haven’t heard of the monetary policy subcommittee. Officially known as the House Subcommittee for Domestic Monetary Policy and Technology, it’s a subdivision of the House Financial Services Committee that has mostly occupied itself with pressing questions of issuing commemorative coins and whether or not to eliminate the penny.

Ireland's new toxic loans will spark social conflict, says economist

'Scary' views of Morgan Kelly who forecast Ireland's property collapse

G20 meeting

With talk of currency wars and disagreements over the US Federal Reserve’s policy of quantitative easing, the summit of the Group of 20 leading economies in Seoul this week is shaping up as the latest test of international co-operation. So we should ask: co-operation to what end?

Six Ways to Profit as Consumerism Supplants Exports and China Throttles Up GDP Growth

"World Bank Sees Change in Growth Pattern" In essence, the World Bank has finally acknowledged what we've been telling you for several years – that China's accelerating domestic growth is already reducing its once-almost-total reliance on exports. This is an important validation of our investment strategies and of China's newest economic policies. Investors who see and understand these developments can expect to enjoy some significant long-term successes.

Not even QE can pump up the British housing market

The new improved batch of quantitative easing (QE2) has been pushing up asset prices almost across the board. Stock markets took a breather yesterday as the dollar bounced against the euro, as fears continue to grow over Ireland's debt woes. But gold continued to rise. However, there's one market that it seems not even QE2 can pump up. And that's the British housing market.

Markets alert for credit crunch 2.0

Is there a second credit crunch looming? Between now and the end of 2012, UK banks and building societies must find ways of refinancing between £750bn and £800bn of lending. That's a number approaching half GDP.

UK's total debt forecast to hit £10 trillion by 2015

Britain's total debt will top £10 trillion by 2015, according to PricewaterhouseCoopers, which warned the burden could slow growth for decades as interest rates eventually rise.

Lessons from the 1970s

In his latest market letter, Murray Pollitt of investment house Pollitt & Co. in Toronto offers some perspective for and guidance to mining company investors.

America will survive the errors of Ben Bernanke's trigger-happy Federal Reserve

America is a resilient nation, with far healthier demographics than China, Japan, Korea, Germany, Italy or Russia. The storm will blow over.

Oil hits two year high as analysts predict $100 a barrel in 2011

Oil prices rose to a two-year high in New York on Friday, raising fears of a return to $100 per barrel crude and consumer goods inflation.

Vince Cable backs Diageo's attempt to buy China's Shui Jing Fang

A landmark deal that would see British drinks giant Diageo take over one of China's best-known spirit brands could be secured during trade negotiations in Beijing this week.

Are gold-backed currencies set to make a comeback?

Gold has grown increasingly popular over the past decade, as you might have noticed. It's reached the point where it's regularly covered in Sunday supplements and on the television. Plenty of entrepreneurs are jumping on the bandwagon with bullion dealers, gold vending machines, and 'sell your gold' companies springing up everywhere. Yet gold has retained that faint tang of lunacy about it. It may have gone mainstream, but it's still disreputable. Anyone with an eye to their intellectual credentials can't admit to liking gold. It's still a 'barbarous relic', of interest only to irrational 'gold bugs'. But even that may be changing now. The front page of this morning's FT reports that the head of the World Bank is calling for a new global monetary order. And there could be a role for gold in his grand vision...

Stock Market Faces Critical Test This Week

Stocks rose gently like heat waves off a radiator over the past week, as traders guessed, assessed and processed the results of the midterm elections and the Federal Reserve's decision to try to light a fire under the U.S. economy by buying a $75-billion pile of fresh, new Treasury bonds every 30 days for the next eight months. The major indexes rose 3.5% amid a set of sessions when banks finally found footing, as they were the best performing group, up 1%. Laggards were industrials and utilities, ending flat. Breadth was positive, favoring advancers by 2-1. And the number of new highs swelled to 1,200 while new lows also rose, to 80.

Doubts grow over wisdom of Ben Bernanke 'super-put'

The early verdict is in on the US Federal Reserve's $600bn of fresh money through quantitative easing. Yields on 30-year Treasury bonds jumped 20 basis points to 4.07pc.

Republican Victory and Fed Easing Means It’s Time to Shift From Commodities to U.S. Stocks

The U.S. economic and investment world has changed fundamentally in the last 48 hours from two key events: * The massive Republican victory in Tuesday's midterm elections. * And the $600 billion worth of bond purchases by the U.S. Federal Reserve. These two events have changed the trajectory of the U.S. economy, probably for the next two years. As investors, we'd better adapt to them - and fast.

The eurozone is heading for a fresh crisis

George Osborne, eat your heart out. If you want to see really tough government spending cuts, you have to cross the Irish Sea. Yesterday, in its budget statement, the government doubled the size of the fiscal cuts it plans to make over the next four years, from €7.5bn to €15bn. And €6bn of that will be taken next year. These are ambitious moves. As RBS put it, it certainly demonstrates that "Ireland is a serious country". Sadly, it might not be enough to prevent Ireland from needing a bail-out in the near future...

Developing Countries Confront a Wall of Capital

The economic recovery from the Great Recession is well underway. Global industrial production and world trade have returned to their pre-crisis levels and most economies are now growing at levels close to their long-term averages.

Fed prints another $600bn to keep US recovery on track

The US Federal Reserve is to pump another $600bn (£370bn) into the economy over the next eight months in a bid to resuscitate America's flagging recovery.

Republican Midterm Election Victories Could Crush Stocks and Bonds Before Sending Them Higher

Markets have rallied on the belief that resounding Republican victories in yesterday's (Tuesday's) midterm elections will reset Washington agendas and lead to more business-friendly policies. However, market participants may be surprised to find that the successful pursuit of three major Republican principles could initially sink stocks and bonds before creating a base from which they might rally later in 2011. Indeed, following the adage "buy the rumor, sell the news" might be the best strategy for investors right now.

What does QE2 mean for your investments?

Federal Reserve chief Ben Bernanke delivered just what financial markets were looking for last night. The Fed is planning to buy roughly $75bn of government bonds a month between now and the middle of next year. That's $600bn in total. Stocks went up, the dollar slipped back, yet gold didn't go haywire (although it's up again this morning). So what does it all mean for investors?

Aussie dollar breaks the buck as Australia, India fight Fed with 'quantitative tightening'

Australia's dollar has blasted through parity against the US dollar after the country raised interest rates a quarter point to 4.75pc to fight inflation.

Midterms 2010: US stock markets rally as investors eye Republican win and more QE

US stock markets climbed to their highest level since the spring as a combination of hefty gains for the Republicans and the prospect of another $500bn from the Federal Reserve gave the optimists the upper hand.

Bank of England must use QE to buy 'bad mortgages', warns Fathom Consulting

Britain is in danger of creating a generation of "zombie households" that plunge the economy into a Japan-style lost decade unless policymakers take radical action to fix the banking system properly, a leading economic think tank has warned.

How Far Will Fed Go To Get Economy Rolling?

The market has been marking time lately as investors await the election results and the much -anticipated Federal Reserve announcement after the Federal Open Market Committee wraps up their meeting on Wednesday. The Fed is expected to provide a peek into its next round of quantitative easing, now considered a fait accompli. The only question seems to be how far the Fed will go to reinvigorate the economy. But unless Republicans fail to capture the House of Representatives on Tuesday, the Fed's next move could provide market bulls with just the ammunition they need to send the bears running for the hills.

How the US central bank is propping up Europe’s dodgiest economies

It's all about America this week. The world's markets will be on tenterhooks until Wednesday's over. By then, we should have a good idea of the results of the mid-term elections. More importantly, the Federal Reserve will have revealed how much more money it plans to print. The Fed's money printing has annoyed leaders of many countries. The US (regardless of what its politicians say) seems to want to drive the dollar lower. The idea is that this will make its exporters more competitive. But that's bad news for rivals, particularly export-dependent countries such as Japan.

Volcker's Rule on Rules

Former Fed chairman Paul Volcker has some advice for financial regulators writing rules to define new limits on banks' ability to trade for their own accounts: be as vague as possible. At least that's the message in this WSJ piece by Deborah Solomon (for which, to be upfront, Volcker declined to comment).

The “Mortgagegate” Scandal: Congratulations America, You’re Now in the Title-Insurance Business

U.S. taxpayers already own pieces of such problem-plagued companies as General Motors Corp., Chrysler LLC, American International Group Inc. (NYSE: AIG), Fannie Mae (OTC: FNMA) and Freddie Mac (OTC: FMCC). Now the increasingly problematic "Mortgagegate" saga could land American taxpayers in the trouble-ridden title-insurance business.

Three signs that the stock market rally is on borrowed time

Yesterday was another 'risk on' day in the stock market. The FTSE 100 rose 0.6% as investors' nerves were calmed by a lower US dollar. When this falls, most other assets rise. This week, though, there's been a wobble about QE2 - the next round of quantitative easing, aka money printing. Market rumours are that the US Federal Reserve will now print less money than had been expected. For global share prices, that was seen as bad news. Wall Street and the City want more, as Dominic Frisby talked about yesterday. But just how much QE hype is baked into stock values? The answer is worrying. Let's have a look...

‘Dr. Doom’: ‘Fiscal train wreck’ may be coming

The U.S. economy is a "fiscal train wreck" waiting to happen that risks ushering in a period of stagnation featuring by minimal growth, high unemployment and deflationary pressure, U.S. economist Nouriel Roubini wrote on Friday.

Faster US recovery fails to dispel economic fears

The pace of America's recovery quickened in third quarter but the news did little to ease anxiety as the US economy faces its most important week since President Barack Obama took office.

Mervyn King must turn off the printing press

Quantitative easing will do little to secure the recovery, says Jeremy Warner.

The Fed is fuelling the catastrophe of fast rising raw material prices

Is the world running out of food, alongside oil, metals, water and much else?

EU 'haircut' plans rattle bondholders

Investors face large potential losses on eurozone debt under German plans likely to win backing from EU leaders on Friday – risking a boycott of Greek, Irish, and Portuguese bonds.

Revealed: how Desire's advisers have cashed in

Aim-listed Desire Petroleum has yet to find a single barrel of oil in the Falkland Islands, despite seven cash calls and 12 years of exploration.

Long-term real growth in US stocks

German Industry Feels Rare-Earth Metals Squeeze

Worries over a bottleneck in rare-earth metals from China, which are needed in the production of high-tech equipment, have dominated a conference on raw materials in Berlin this week. Beijing says export quotas are almost filled for the year. German Economics Minister Rainer Brüderle has called for more recycling and greater cooperation between the EU and the US to fill the gap.

China minister says dollar printing "out of control"

Dollar issuance by the United States is "out of control," leading to an inflation assault on China, the Chinese commerce minister said in comments reported on Tuesday.

Greece reignites Europe debt woes

Europe's debt woes have returned to the fore after Greek premier George Papandreou threw open the door to fresh elections and vowed to liberate the nation from "slavery and surveillance".

CNBC VIDEO Alternative Investments - Gold vs Silver

Gold vs. Silver, which is the better investment? CNBC put the two precious metals in a boxing ring, in the form of James Turk, chairman and founder of Goldmoney and Charlie Morris, head of absolute return at HSBC Global Asset Management (UK), to find out.

Fed Won't Join Supreme Court Appeal on Loan Disclosures

The Federal Reserve won’t join a group of the largest commercial banks in asking the U.S. Supreme Court to let the government withhold details of emergency loans made to financial firms in 2008.

Goldman says Fed faces $4 trillion hole

Economists at Goldman Sachs estimate the Federal Reserve may need to buy a staggering $4 trillion worth of assets such as Treasury securities to get the economy rolling again.

Interest rates set to rise as economy recovers

Interest rates will start to rise sooner than expected after official figures showed the economy growing at its fastest rate for a decade, economists have said.

Banks should be broken up, Bank of England Governor Mervyn King warns

Mervyn King, Governor of the Bank of England, has thrown his weight behind breaking up the banks as part of wider reforms to protect the taxpayer from another financial industry meltdown.

Top 5 Graphs of the Week: China Economic Outlook

This week the focus is on China, with the quarterly statistics out this week - as well as a surprise interest rate increase from the PBOC. Among the data we review in this edition is GDP growth, inflation trends, the interest rate decision, retail sales growth, and the continued rise of new lending.

If the Fed won't print more money, markets could turn very ugly

By the end of last week, junk bonds had soared back to pre-crisis levels. Emerging markets were doing the same, as were countless different commodities. Stock markets in the West continued their rise. For those on the long side, things were looking very rosy. Meanwhile, the US Federal Reserve Bank, which had been hinting strongly that QE2 - the next bout of quantitative easing, or money printing - is on the way, meets next week. They've got a hell of a decision to make. Markets have been fuelled in recent months by the promise of more cheap money. Will the Fed take the risk of popping the bubble now? Or will it continue to let it inflate?

An Open Letter to Washington: How to Fix the Deficit and End the Bush-Tax-Cuts Debate

Dear Mr. President and members of Congress: In the months that follow Tuesday's midterm elections, and into the New Year, you all face three very significant challenges. You must: * Find a solution to the Bush-tax-cuts controversy. * Rein in the huge-and-growing U.S. budget deficit. * And better police Wall Street, which got us into this mess in the first place. You can solve all three of these problems with a single, simple proposition. And you can do so without having to ask U.S. taxpayers to dig into their wallets or savings. Let me explain.

The US banking sector is signalling danger for stocks

The huge problem with US commercial property

Goldman: The Fed Needs To Print $4 Trillion In New Money

With just over a week left to the QE2 announcement, discussion over the amount, implications and effectiveness of QE2 are almost as prevalent (and moot) as those over the imminent collapse of the MBS system. Although whereas the latter is exclusively the provenance of legal interpretation of various contractual terms, and as such most who opine either way will soon be proven wrong to quite wrong, as in America contracts no longer are enforced (did nobody learn anything from the GM/Chrysler fiasco for pete's sake), when it comes to printing money the ultimate outcome will certainly have an impact. And the more the printing, the better. One of the amusing debates on the topic has been how much debt will the Fed print. Those who continue to refuse to acknowledge that the economy is in a near-comatose state, of course, hold on to the hope that the amount will be negligible: something like $500 billion (there was a time when half a trillion was a lot of money). A month ago we stated that the full amount will be much larger, and that the Fed will be a marginal buyer of up to $3 trillion. Turns out, even we were optimistic. A brand new analysis by Jan Hatzius, which performs a top down look at how much monetary stimulus is needed to fill the estimated 300 bps hole between the -7% Taylor Implied Funds Rate (of which, Hatzius believes, various other Federal interventions have already filled roughly 400 bps of differential) and the existing 0.2% FF rate. Using some back of the envelope math, the Goldman strategist concludes that every $1 trillion in new LSAP (large scale asset purchases) is the equivalent of a 75 bps rate cut (much less than comparable estimates by Dudley, 100-150bps, and Rudebusch, 130bps). In other words: the Fed will need to print $4 trillion in new money to close the Taylor gap. And here we were thinking the economy is in shambles. Incidentally, $4 trillion in crisp new dollar bills (stored in bank excess reserve vaults) will create just a tad of buying interest in commodities such as gold and oil... Here is the math.

G20 has to show compromise FX pact packs meaning

Excited talk of currency wars has given way to an uneasy truce, but what has so far been a phony war could yet break out into outright hostilities.

Singapore Exchange to buy ASX for $8.3 billion

Singapore Exchange (SGX) (SGXL.SI) has agreed a $8.3 billion takeover of Australia's ASX Ltd (ASX.AX) to create Asia's fourth-largest stock exchange, aiming to cut costs and fight growing competition.

It's every nation for itself in the devaluation race

Is it really only two years since the world's most powerful nations stood shoulder to shoulder, promising to do what it took to haul the global economy back from the brink?

Warren Buffett banks another profit

Warren Buffett certainly hasn't lost his magic touch.

CNBC VIDEO Dollar at Risk of Becoming 'Toxic Waste'

The dollar's slump could be set to get far worse and if the dollar index takes out last year's low it could pass into the investment category labeled "toxic waste", Robin Griffiths, technical strategist at Cazenove Capital, told CNBC Monday.

Owners Seek to Sell at Loss as Banks Push Foreclosure

Bank of America and GMAC are firing up their formidable foreclosure machines again today, after a brief pause.

Bank of America Finds Foreclosure Mistakes: Report

Bank of America acknowledged some mistakes in foreclosure files as it begins to resubmit documents in 102,000 cases, the Wall Street Journal said.

Dollar softer after G20 strikes uneasy FX truce

The U.S. dollar slipped and looked likely to stay under pressure in Asia on Monday after the Group of 20 major economies agreed to shun competitive currency devaluations.

China against current account limits: G20 source

China has made clear it will not agree to a G20 communique that explicitly binds countries to limits on current account balances or any other form of rules on currency policy, a G20 source told Reuters on Friday.

Bank Failures per Year Oct 22, 2010

The Monetary Breakdown of the West

To understand the current monetary chaos, it is necessary to trace briefly the international monetary developments of the 20th century, and to see how each set of unsound inflationist interventions has collapsed of its own inherent problems, only to set the stage for another round of interventions. The 20th-century history of the world monetary order can be divided into nine phases. Let us examine each in turn.

Foreclosuregate Goes Beyond the Banks

Jamie Dimon, CEO of JPMorgan Chase, suggested last week that if the foreclosure verification problem was not fixed within a few weeks, it would probably be mean bad news for everyone. Now, with stories of evictees breaking into foreclosed homes, and fearful articles in The New York Times suggesting that buyers should steer clear of foreclosures until things are sorted out, it is difficult to imagine the situation will resolve fully within a month.

Fannie Mae, Freddie Mac bailout cost is likely to rise to $154 billion, agency projects

The bailout of Fannie Mae and Freddie Mac is likely to cost taxpayers an additional $19 billion and may cost as much as $124 billion more if the economy starts shrinking again, according to a government projection released Thursday.

China Said to Widen Its Embargo of Minerals

China, which has been blocking shipments of crucial minerals to Japan for the last month, has now quietly halted some shipments of those materials to the United States and Europe, three industry officials said this week.

Pimco, NY Fed Said to Seek BofA Repurchase of Mortgages

Pacific Investment Management Co., BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said. A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc. Investors are stepping up efforts to recoup losses on mortgage bonds, which plummeted in value amid the worst slump in home prices since the 1930s. Last month, BNY Mellon declined to investigate mortgage files in response to a demand from the bondholder group, which has since expanded. Countrywide’s servicing failures, including insufficient record keeping, may open the door for investors to seek repurchases by bypassing the trustee, said Kathy Patrick, their lawyer at Gibbs & Bruns LLP.

Mortgage Buybacks May Cost Lenders $120 Billion, JPMorgan Says

Forced repurchases of soured U.S. mortgages may be the “biggest issue facing banks” even as errors in the foreclosure process draw attention to other industry risks, according to JPMorgan Chase & Co. analysts. Future losses from repurchases of home loans whose quality failed to meet sellers’ promises will likely total $55 billion to $120 billion, or potentially $10 billion to $25 billion for the next five years, the New York-based mortgage-bond analysts led by John Sim and Ed Reardon wrote in a Oct. 15 report.

Vince Cable in push for 'Cadbury law'

The Government is to launch a major inquiry into "short-termism" and shareholder behaviour in the City after Vince Cable, the Business Secretary, said that the Takeover Panel findings on how investors influence takeover battles had been "modest" and a "small move".

BT ruling could open pension claim floodgates

Taxpayers could be on the hook for tens of billions of pounds to cover a string of privatised companies' pension schemes after the precedent set by BT's landmark "crown guarantee" victory.

Gilt yields fall to record low on QE expectations

Gilt yields hit a record low after the Chancellor indicated he is relying on the Bank of England to safeguard the recovery through monetary stimulus if his £81bn of savings cut too deep.

Dollar plummets on report Fed plans to pump $500bn more into economy

US stock markets recovered on Wednesday as the dollar fell across the board amid further signs the Federal Reserve will increase economic stimulus over the next six months.

What We Can Learn From The Stock Market Genius That Wall Street Loves to Ignore

As mathematicians go, Mandelbrot was very likely the best of the last half-century. And that brilliance extended to the financial markets. In fact, his groundbreaking insights into the operations of the stock market could have been used to avert the 2008 crash - had those insights only been heeded. But Mandelbrot - for all his stock market genius - has been largely ignored by Wall Street. As investors, let's not make the same mistake.

Silver will go much higher - but take some profits for now

Silver is the precociously gifted, but errant teenager of the commodities markets. I doubt that there's any other commodity with as much potential. And it's a potential that many 'talent scouts' have long since identified. And yet, like the troubled, youthful genius who the whole world wants to do well but seems determined to snatch failure from the jaws of victory, silver so often seems to disappoint. Of late that has not been the case. It has burst to 30-year highs. But yesterday's sell-off was a reminder of how silver can fall when it wants to. So is it set to disappoint us all again?

iDepression 2.0: An Unemployment Reality Check

As I listen to pundits, politicians and populists expound on the jobs situation in our country day after day, as if they knew what they were talking about, I’m reminded of the Seinfeld episode where George quits his job as a real estate agent. He sits in Jerry’s apartment and ponders whether he could become the general manager of the Yankees, a sportscaster, getting paid to watch movies, or a talk show host. After the discussion with Jerry, he realizes that he has absolutely no skills that are transferable to another career. Everyone in America would like to be the General Manager of the Yankees or get paid for watching movies, but that isn’t how it works in the real world.

U.S. will not engage in dollar devaluation

U.S. Treasury Secretary Timothy Geithner on Monday sought to ease fears the United States was actively weakening the dollar to gain an export edge, saying no country could devalue its way to health.

Paging Bob Pisani: Mutual Funds See 23rd Sequential Outflow, As Redemptions Accelerate, Hit $80 Billion

Sorry CNBC (and Bob) but there is no way to spin this. ICI has just reported the latest in what is now a weekly farce: nobody wants a piece of this market. Nobody. Retail is out permanently, as was confirmed by the 23rd sequential outflow from domestic equity mutual funds, this time redeeming $5.6 billion, the highest since the beginning of September, right before the Fed full blown stock ramp intervention began. And that brings the total YTD mutual fund redemptions to $80 billion. Sorry bankers - no greater fool, no hot potato. The jig is up. Have fun selling AAPL at $50,000,000 to each other (and of course ENIAC) in subpenny increments. Everyone else will stick to bonds and gold. Lights out.

 

Look to Emerging Markets as the Federal Reserve Diminishes the Dollar

The main thrust of the past two months has been the renewed collapse of the U.S. dollar. The dollar has been on a one-way elevator ride to the ground floor since August, when U.S. Federal Reserve Chairman Ben S. Bernanke first warned that quantitative easing was on the horizon. Most recently, the minutes of the Federal Open Market Committee's (FOMC) last meeting telegraphed further monetary stimulus. ''In light of the considerable uncertainty about the current trajectory for the economy, some members saw merit in accumulating further information before reaching a decision about providing additional monetary stimulus," the minutes read. "In addition, members wanted to consider further the most effective framework for calibrating and communicating any additional steps to provide such stimulus. Several members noted that unless the pace of economic recovery strengthened or underlying inflation moved back toward a level consistent with the Committee's mandate, they would consider it appropriate to take action soon." Concerns about inflation being too low almost guarantees additional quantitative easing unless the recovery gets a big shot in the arm before the next meeting in early November.

Could the US repossession scandal sink the banks again?

Only one day to go until 'the cuts'. It's like the mirror image of Christmas Eve. Instead of getting presents, tomorrow we'll wake up and find out about all the things that the government is planning to take away from us. I'm not going to waste your time here by speculating on what might happen. Obviously we've already seen several changes announced, but you never know what they'll pull out of the hat on the day. The key things to watch will be how the pound and gilts react. If the cuts are less violent than expected, we'll see a weaker pound, higher gilt yields and probably a relief rally in stocks. If they're tougher than expected (though that seems unlikely), the opposite will happen. In the meantime, let's take a look at something completely different – this US foreclosures business. It's been bubbling away in the background, but there's every sign that it won't stay that way...

China Just Raised Rates, And The Dollar Is Spiking .

China is taking another serious move towards tightening money, reining in its bubble, and implicitly putting upward pressure on the yuan

BHP and Rio scrap $116 billion iron ore joint venture

(Reuters) - BHP Billiton (BHP.AX) and Rio Tinto (RIO.AX) ditched plans to form the world's biggest iron-ore joint venture, in a victory for steel makers and a move that could prompt both miners to step up competing expansion plans.

As the Rescue of the Chilean Miners Shows, this South American Country is Superbly Managed and an Enticing Investment

The efficient, well-managed rescue of the 33 Chilean miners was an affecting spectacle for the world. It also should remind us that Chile is a well-run country, and that in an era when commodities are ever more important to the global economy, it is becoming an essential part of investors' portfolios. Earthquakes are terrifying and mining is a dangerous job anywhere, but you're much more likely to survive an earthquake or a mine disaster in some countries than in others. Indeed Chile's performance both in the earthquake and this mine disaster was of the highest quality probably only in Germany, Scandinavia and maybe Singapore could one reliably expect public rescue services to work so effectively. For investors, the Chilean earthquake and mine disaster experiences have an important lesson: Countries with really good management should be promoted sharply up investor league tables, for a number of reasons.

Fed chief Ben Bernanke signals more easing to counter high unemployment, low inflation

Ben Bernanke, the chairman of the US Federal Reserve, said with unemployment too high and inflation too low there was a case for further action to stimulate the world's biggest economy.

US Consumer Sentiment

Washington Policy Makers Resist Calls for a Big Fix in Foreclosure Crisis

Washington policy makers, who moved swiftly to calm markets during the subprime mortgage crisis in 2008, have resisted calls for similarly broad steps in response to concern that banks may have acted illegally to seize homes.

Bernanke Sees Case for `Further Action' With Too-Low Inflation

Federal Reserve Chairman Ben S. Bernanke said additional monetary stimulus may be warranted because inflation is too low and unemployment is too high.

What You Don’t Know about “Mortgagegate” Could Crush the U.S. Banking System

What most Americans don't know about " Mortgagegate" is that "robo-signing" of foreclosure documents is the tip of the iceberg. The breadth and depth of this newest mortgage crisis is so dangerous that the U.S. Federal Reserve last month pre-announced another potential round of quantitative easing (pundits are calling it "QE2") to address "potential negative shocks." In fact, the fallout potential is so numbing and the actions that birthed it so scandalous that commentators have given the crisis the Watergate-esque title of " Mortgagegate" (or, as some prefer, "Mortgage Gate"). Here's what the news-story headlines aren't telling you.

The US can win the currency war – but it'll regret it

I'm at the tail end of the generation that still remembers vaguely what it was like to live in a world where the big overshadowing fear behind the daily headlines was nuclear apocalypse, rather than climate change, or total economic collapse. The optimists' argument against the idea that we'd end up blowing ourselves and each other up was that "no one would be crazy enough to do it". The doctrine of 'mutually assured destruction' – the fact that as soon as you launched one missile, the other side would fire off ten in your general direction – would prevent anyone from pressing the big red button. And luckily enough, the USSR didn't survive quite long enough for either side in the Cold War to produce such a leader. Sadly, today's currency wars are different. Everyone knows that a race to the bottom will be hugely damaging. But what can the rest of us do when the biggest currency of all – the US dollar – is run by Ben Bernanke, who once theorised about dumping helicopter-loads of money into the streets. 'Blackhawk Ben', as he's been nicknamed by traders, has certainly persuaded investors that he's more than willing to sacrifice the dollar to reflate the US economy – whatever the cost...

China warns US against making yuan dispute a 'scapegoat' for a flagging economy

China has again warned the US not to use the dispute over the value of the Chinese currency, the yuan, as a “scapegoat” for its high unemployment and flagging growth prospects.

Economic Hallucinations

Two generations ago the gold price in Bombay was about 450 rupees, whereas today it is about 58,000 rupees. Indians, along with nearly all non-Westerners, generally assume that, rather than the gold price being up, the money is down. Put differently, gold is gold, copper is copper, it’s the money that changes. Only in the Anglo-American world do investors consider money stable and things (gold, copper, whatever) volatile. It will prove a fatal mistake.

Fears of global currency war rise

Thailand is introducing a tax on foreign holdings of bonds, the latest in a string of attempts by emerging economies to curb destabilising capital inflows amid fears of a global currency war. The Thai cabinet on Tuesday imposed a 15 per cent withholding tax on capital gains and interest payments for government and state-owned company bonds, a clear signal that it would take tough measures to curb inflows of "hot money".

The junk bond bubble is set to pop – here's how to profit

As the old adage goes, they don't ring a bell at the top. If you want to know – in any market – when prices are peaking out, you have to work it out for yourself. It's not easy. If it were, everyone would be doing it. But there are often signals you shouldn't ignore. Worrying signs are appearing in several markets right now. Some of the most concerning, though, are showing up in 'junk' bonds. Yes, they've done very nicely of late. But this is one market that could be heading for a pile-up.

Skype and Facebook announce video calls deal

Skype users will now be able to sync their Facebook profile with their Skype account, providing one click video calling to friends on the social networking site.

There is no soft option when confronting our economic reality

Forecasters may disagree, but some harsh truths are unavoidable, writes Jeff Randall.

MBA Purchase Index

The Purchase Index includes all mortgages applications for the purchase of a single-family home. It covers the entire market, both conventional and government loans, and all products. The Purchase Index has proven to be a reliable indicator of impending home sales

Goldman Tells Clients To Buy COMEX Gold At $1,364.2, Raises 12 Month Gold Forecast From $1,365 To $1,650, Silver To $27.60

Alarm bells are ringing everywhere as Goldman (which joins UniCredit in boosting its gold price target) may have just picked the short-term top in gold, after it revised its 12 month target from $1,365 to $1,650. And while David Greely's track record is nowhere near as atrocious as that of Goldman's FX team which manages to top tick the EURUSD every single time, the fact that Goldman is now opening Long Gold recommendations (to go with its current trading recommendations of long Corn, Copper, Platinum and WTI) is reason for big worry. Recall which bank was getting its clients to go all in in crude 2008 when oil was $140+. We would be very cautious when Goldman is on "your" side of the trade. Nonetheless, the firm is pretty much spot on "We believe that a return to quantitative easing will act as a strong catalyst to carry gold prices to even higher levels."

US 'Robo foreclosures' threaten new financial meltdown

Anyone who thought the American housing crisis was starting to abate should think again. In fact it threatens to enter a new, and possibly even more destructive phase. The cause is growing foreclosure abuse. This has already prompted Bank of America and JP Morgan to call a moratorium on foreclosures. The White House is under growing pressure to extend this to a nationwide ban.

Everything You Need to Know About Tomorrow’s OPEC Meeting

Crude dropped for the second straight day yesterday (Tuesday) after Saudi Arabia made it clear that the Organization of the Petroleum Exporting Countries (OPEC) will leave its production targets unchanged at its meeting tomorrow (Thursday). Crude oil for November delivery fell 54 cents a barrel - or 0.7% - to finish at $81.67 a barrel on the New York Mercantile Exchange yesterday. Even with yesterday's decline, oil prices are up 11% over the past 12 months. Speaking in advance of tomorrow's OPEC meeting in Vienna, Saudi Oil Minister Ali al-Naimi said that prices between $70 and $80 a barrel are "ideal," and noted that the market is "very well-balanced" right now. In a related development, Sanford C. Bernstein & Co. LLC slashed its oil-price forecasts for both next year and 2012, and attributed the new viewpoint to big stockpiles. But this only provides you with part of the picture. And it'll lead you to the wrong conclusions. So here's the proverbial "rest of the story" - including everything you need to know about tomorrow's OPEC meeting.

Question of the Week: Investors Seek Metals To Soften Blow of Global Currency War

he housing market remains in the dumper. U.S. stocks - despite a rally - are still 22% below their record highs of two years ago. And the "official" unemployment rate remains at a heart-stopping 9.6%. Question of the Week With their knees almost ready to buckle under such burdens already, how will American consumers respond when clothes, computer accessories and other key consumer staples at their neighborhood Wal-Mart Stores Inc. (NYSE: WMT) undergo an overnight price hike of 30% to 60%? As the United States aims to increase exports by debasing the dollar, a global currency war is underway that could swallow consumers and investors if they don't prepare for the likelihood of a weaker dollar. The United States, China, Switzerland, Brazil, South Korea, Australia, Japan have all entered the war, trying to bring down their currencies to boost exports and fuel growth.

What now for the dollar - collapse or miracle recovery?

Do you remember back in June when the euro was going to collapse? It's now up 17.5% against the dollar. In May, the pound was doomed. It's since up about 11% against the dollar. Now, apparently, the end is nigh for the US dollar. But is it really? Or will it be the next currency to see a miracle recovery?