But four months later, China’s resolve to avoid a showdown over trade with the West appears to have weakened as the country struggles to keep its manufacturing sector growing during recession. Instead, China, the U.S. and the European Union may be sliding toward the kind of tit-for-tat trade battle that economists warn could impede commerce and stall a global economic recovery.
Monthly Archives: June 2009
With China one of the few economies that’s showing an economic pulse, a lot of the cash that’s been sitting on the sidelines is piling into almost anything Chinese, driving stocks to lofty valuations. Bawang’s IPO, for example, which begins trading July 3, is expected to be priced at more than 20 times the earnings it reported as a private company last year.Such rich multiples are unjustified in a recession. Duoyuan is seen as a direct play on China’s $585 billion stimulus spending program, which is focused on infrastructure projects like water and sewer systems. But for the company to benefit (it manufactures equipment for wastewater circulation and filtration), government money must actually go to infrastructure-building and not be wasted through inefficiencies and corruption. Bawang, which competes with P&G and Unilever, among other personal-care products companies, is supposed to ride China’s rising personal consumption. That may be a dicey proposition in a country of thrifty citizens who have long been accustomed to saving nearly 40% of their disposable household income.
Following nearly seven years of adamant denials, North Korea announced it can enrich uranium — a simpler method of building nuclear weapons than reprocessing plutonium. Uranium can be enriched in relatively inconspicuous factories that can better evade spy-satellite detection, and uranium bombs may work without test explosions.
- The next great crisis: America’s debt | 1913 Intel
- Sovereign Debt | 1913 Intel
- Latvian crisis deepens as Europe debates aid | 1913 Intel
- Great Depression | 1913 Intel
- Entire World | 1913 Intel
- Looming Collapse of Russia, China and more … | 1913 Intel
- Government Auction | 1913 Intel
- Exploding debt threatens America | 1913 Intel
- Nigeria’s oil curse | 1913 Intel
- Wall Street is Starting to Worry About the Size of U.S. Debt …
At this rate, your share of the load will be $155000 in a decade. How chronic deficits are putting the country on a path to fiscal collapse.
Latvian debt crisis shakes Eastern Europe Telegraph.co.uk – Jun 3, 2009 … a sovereign debt crisis after failing to sell a [...] …
a sovereign debt crisis after failing to sell a single bill at a treasury auction worth $100m (£61m), prompting fears of a fresh storm in …
The undeniable reality: The debt crisis that first appeared in the U.S. subprime mortgage market … then precipitated a Wall Street meltdown … and has now …
The undeniable reality: The debt crisis that first appeared in the U.S. subprime mortgage … The debt crisis is driving the economies of Western Europe [. ...
The undeniable reality: The debt crisis that first appeared in the US subprime mortgage market ... then precipitated a Wall Street meltdown ...
Read More… Latvian debt crisis shakes Eastern Europe Telegraph.co.uk - Jun 3, 2009 … a sovereign debt crisis after failing to sell a [...] …
Tags: pyramid scheme, ponzi scheme, national debt, financial crisis, credit crunch, budget deficit, national savings, dollar collapse, …
Nigeria Pays Off Its Big Debt, Sign of an Economic Rebound www.nytimes.com Nigeria: the Burden of Debt www.pbs.org 1980s debt crisis: …
US DEBT – FUTURE VISIONS – MARTIAL LAW – 2012 FEMA COFFINS ( might be exaggerations but Who knows ) Financial Crisis Explained. …
In 33 minutes or less, life as we know it in America could end. That’s how long it would take for an enemy ballistic missile launched from the other side of the world to hit the United States. If it carried and detonated a nuclear weapon high over the center of the country, the electromagnetic pulse (EMP) would literally fry the nation’s electrical grid and all of the circuitry that powers our homes, businesses, hospitals, phones, cars, planes, traffic lights, ATMs, water supplies, and anything else not “hardened” against such attacks. The EMP Commission chairman has testified that, within just one year of such an attack, 70 percent to 90 percent of Americans would be dead from starvation and disease.
NTI: Global Security Newswire – “Global Zero” Backers Propose U.S.-Russian Nuclear Cuts to 1,000 by 2018
Proponents of a plan to rid the world of nuclear weapons proposed yesterday that Russia and the United States agree to an interim step in which they each cut their arsenals to 1,000 strategic warheads by 2018 (see GSN, June 29).
Mines are perhaps the most attractive weapons available to prevent U.S. naval forces from achieving sea control and power projection ashore. They’re cheap, easy to get, easy to deploy, come in a variety of forms and have a potent impact on joint expeditionary warfare. …And neutralizing mines by hand is not a job for the faint hearted.
The U.S. Navy and Northrop Grumman are fielding a system that is a generational leap for clearing mines in a way that has never existed before. This transformation in the Navy’s Organic Mine Countermeasures (OMCM) system will meet future requirements for high-tempo operations in a joint warfighting campaign.
Food shortages returned last year, while aid and investment from neighbors such as South Korea and Japan have dwindled. How bad the situation may be is hard to assess since North Korea doesn’t reveal significant economic data. Estimates from South Korea’s central bank, released on Monday, suggest that North Korea’s gross domestic product recovered in 2008 after two years of contraction, with 3.7% growth. The bank attributed the increase to “one-off factors,” such as an improved harvest.
HSBC Holdings Plc Chairman Stephen Green said that the world financial and economic crisis is “far from over” two years after it began.
“We are almost two years into a financial and economic crisis which is far from over,” Green told a conference in London today. “We cannot even say we are past the worst.”
Washington and Wall Street seem to be treating California as if it were a sideshow in the financial circus of these turbulent times.
California is home to the largest manufacturing belt in the United States and to Silicon Valley, the nation’s largest high-tech center.
California is America’s most populous state with 38 million people. Its GDP of $1.8 trillion is the largest in the U.S. Its economy is bigger than those of Russia, Brazil, Canada, or India.
And it’s collapsing.
Major California counties are ground zero in the continuing mortgage meltdown:
Los Angeles County with 5.32 percent of mortgages 90 days past due … Monterrey County, 8.02 percent … Imperial, 8.13 … San Bernadino, 8.66 … Madeira, 9.21 … San Joaquin, 9.53 … Riverside, 10.2 … Merced, 10.57 … and more!
California’s inventory of foreclosed homes is skyrocketing. Home prices are plunging. And the impact of surging unemployment is just beginning to show up in the data …
Worst Unemployment in 64 Years
The state’s unemployment rate has surged to 11.5 percent, the worst since World War II.
Last month, California lost 68,900 jobs. And since July 2007, it has lost 859,000 jobs, including 739,500 just in the past 12 months.
Even if the economy recovers, an unlikely scenario in my view, economists agree that California will continue to be slammed by layoffs, at least through the end of this year and probably well into 2010.
And even assuming a national recovery, UCLA’s Anderson Forecast projects an average unemployment rate of 12.1 percent from this fall through next spring.
What about without a national recovery? California’s jobless could go beyond 15 percent.
Worse, if you include part-time workers seeking full-time work plus workers who have given up looking entirely, it could reach 25 percent, exceeding the worst national unemployment levels of the Great Depression.
“Our wallet is empty.
Our bank is closed. And
our credit is dried up.”
These are not the words of a Dr. Doom in New York or a forlorn banker in Georgia. They represent the confession of Governor Arnold Schwarzenegger before a rare joint session of the California legislature … and with no exaggeration!
The state faces a stunning $24.3 billion budget deficit, even assuming no significant deterioration in the economy from this point onward. And the state has lost virtually all hope of President Obama declaring, “California is too big to fail.”
California State Treasurer Bill Lockyer tried to make that argument to Washington, and did so with great vigor. But he was rejected. After the long line-up of failed companies with hat in hand in recent months — on the steps of Congress or the White House lawn — some folks in government finally appear to have learned how to just say “no.”
“You’re on your own,” is the message from the president to the governor. “Beyond your share of the stimulus package, that’s it! No more!”
Result: The inevitability of massive state cutbacks, including large numbers of state jobs getting axed — all while the California jobless rate is already 11.5 percent.
How many state jobs are in jeopardy? Right now, Schwarzenegger is proposing laying off 5,000 state employees, as well as slashing education and social welfare programs. But the Anderson Forecast projects that Schwarzenegger’s budget cuts will eventually result in 64,000 job cuts from state government plus countless private-sector and local government jobs.
Massive Downgrades Coming
California’s credit rating is already the lowest among all U.S. states.
But with Moody’s, S&P, and Fitch still greatly influenced by massive conflicts of interest, it’s not nearly low enough.
And sure enough, on Friday, Moody’s tacitly admitted as much, announcing that it may have to cut California’s rating by several notches in one fell swoop!
Standard & Poor’s put California on watch for a possible downgrade a few days earlier. Fitch did the same May 29.
The big problem: Once downgraded, California’s rating is likely to fall below the minimal level legally required for most money market funds, forcing these funds to dump California paper posthaste.
“If the Legislature does not take action quickly, the state’s cash situation will deteriorate to the point where the controller will have to delay most non-priority payments in July. … Lack of action could result in a multi-notch downgrade.”
But lack of action is precisely what Sacramento is now becoming most famous for. In fact, in their latest scuffle, Democrats proposed a budget that would raise $2 billion from cigarette taxes and oil companies. But the governor promptly vetoed the plan. So now Sacramento is in a new, escalating battle over the deficit just weeks before the state is expected to run out of cash to meet payroll and other bills.
State officials continue to insist that a state default is unthinkable … much like GM executives said their bankruptcy could never happen.
In my view, there is a very HIGH probability that California will default.
It’s obvious its debt merits a junk bond rating from every Wall Street rating agency.
And it’s equally obvious that the ratings agencies are artificially inflating the rating, stalling downgrades, and grossly understating the risk to investors.
1. If you wait for Moody’s or S&P to act, it could be too late. Even if you can’t get what you might consider a good price, sell all California paper now!
2. Seriously consider dumping all tax-exempt bonds. I know the income is better than equivalent Treasuries. But if California defaults, it could set off a chain reaction of bond price plunges and defaults throughout the municipal bond market.
3. Don’t underestimate the impact California’s depression is having — and will continue to have — on the rest of the U.S. economy. At $1.8 trillion, the state’s GDP is so large, any further deterioration could wipe out every so-called “green shoot” in the national economy seen to date.
4. Stay safe, with a big portion of your nest egg in cash, tucked away in short-term Treasury bills … and with a very modest portion in gold, as an insurance policy against a dollar decline.
Good luck and God bless!
This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.