2011: Year of the bank run?

The New Year and Financial Crises
The New Year is likely to bring renewal of financial problems in the European Union. In Greece, the crisis was fiscal in origin and spread to Greek banks and banks in other countries that had lent to Greek banks and the Greek government. In Ireland, the crisis began with problem real-estate loans at Irish banks. That spread to European Banks, mainly British, that had lent to Irish banks. In its year-end issue, The Economist reminds us of the 2008 banking crisis in Iceland.  The Ic...

Estonia gets cool welcome from a eurozone in crisis
It is a sign of how tough 2010 has been for Europe that the talk is not of the country joining the club but of those that might no longer be members by the end of 2011. A break-up of the single currency is still thought unlikely, but 12 months ago so too was the idea that both Greece and Ireland would need to call in the International Monetary Fund to help them through their Sovereign Debt crises. The past two months have been marked by daily reports of rising bond yields, Debt downgrades from t...

Crisis In Euroland
The euro, that artificial Funny Money used by 331 million Europeans in17 nations -- the 17th, Estonia, joined the euro just this week -- was conceived in sin and born in Corruption. The New Year brings the prospect that the sins of the European Union's Founding Fathers will be visited on its hapless citizens in the form of financial turmoil and fiscal pain. The original sins at the euro's conception included stealth, lies, and hypocrisy. That at least was consistent with the creation of "Europe"...

Dollar climbs at start of 2011 on hopes for growth
That suggests that the broader economy grew at an annual rate of about 4 to 4.5 percent, said Capital Economics analyst Paul Ashworth. The U.S. economy grew 2.6 percent in the July-September quarter. In late trading in New York, the Euro dropped to $1.3364 from $1.3367 late Friday. The British pound dropped to $1.5491from $1.5590, while The Dollar rose to 81.65 Japanese Yen from 81.21 yen. Seventeen European nations use the Euro after Estonia on Saturday adopted the common currency. It has dro...

China set to bailout Spain with a massive purchase of sovereign debt
China goes on its Bailout tour and expresses confidence in Spain's ability to recover from its economic crisis. Beijing will buy Spanish public Debt despite market fears of an Irish-style bailout. They may get their hands burned, but if not, they will profit handsomely by buying Debt on fire sale as other investors panic. China has also bought some of Portugal's debt, but steered clear of Ireland and Greece. The comments by Vice Premier Li Keqiang were made in an op-ed piece in Spain's leading...

Dollar climbs at start of 2011 on hopes for growth
The dollar climbed broadly Monday at the start of a new year on hopes that U.S. Economic Growth will accelerate in 2011. U.S. Stock Markets also rose 1 percent or more after a key U.S. Manufacturing survey said growth rose last month to its fastest pace since May. The Institute for Supply Management, a trade group, said its index of Manufacturing activity rose to 57 in December from 56.6 in November. Any reading over 50 indicates growth. New orders, a gauge of future factory activity, also jumpe...

The world in 2011
THE EU THE fundamental question facing the EU this year is one of leadership - is there anyone with the vision to lead the 27-nation bloc forward after a very tough 2010? Britain is of course in a different position from the other big western European count ADVERTISEMENT ries, being outwith the Eurozone - it is the now 17 countries using the currency that have most to lose if national economic interest triumphs over concerted action. However, these are same European countries that make up...

Merkel must get Germans to back sound EU
The Debt crisis has strengthened Germany's hand in Europe, but Chancellor Angela Merkel will have a tough time convincing voters that leadership might also mean digging deep for additional aid. "So far, people do not see the costs that might be associated with what politicians have agreed to, namely some nation states underwriting the Debt of others," Barclays Capital Economist Thorsten Polleit told AFP. As the de facto Eurozone paymaster, Merkel has imposed strict aid conditions and insisted me...

China backs Spain to emerge from crisis: Beijing
China is confident Spain will recover from its economic crisis and Beijing will buy Spanish public Debt despite market fears of an Irish-style Bailout, a top Chinese official said Monday. The comments by Vice Premier Li Keqiang were made in an op-ed piece in Spain's leading daily El Pais one day ahead of his arrival in Madrid for a three-day official visit, the start of a European tour that will also include Britain and Germany. "Since China is a responsible investor country in the long-term ...

Spain's ACS snaps up stake in German builder
Spain's biggest Public Works group ACS said on Tuesday it has succeeded in snapping up more than 30 percent of shares in German rival Hochtief, a key step towards taking overall control. ACS, led by Real Madrid football club chairman Florentino Perez, said it has acquired 30.34 percent of the German group, which had battled furiously against the Spanish bid. Under German law, ACS is now allowed to buy its prey's shares on the open market, opening the way for it to take a majority stake and bec...

Spain's ACS snaps up stake in German builder
Spain's biggest Public Works group ACS said on Tuesday it has succeeded in snapping up more than 30 percent of shares in German rival Hochtief, a key step towards taking overall control. ACS, led by Real Madrid football club chairman Florentino Perez, said it has acquired 30.34 percent of the German group, which had battled furiously against the Spanish bid. Under German law, ACS is now allowed to buy its prey's shares on the open market, opening the way for it to take a majority stake and becom...

Eurozone inflation above bank target in December
Consumer prices in the 16 countries that used the euro at the end of 2010 rose by more than anticipated, and Inflation is now running above the European Central Bank's target. Eurostat, the EU's statistics office, said Tuesday that consumer prices jumped 2.2 percent in the year to December, up from November's 1.9 percent rate, and ahead of analysts' expectations for a more modest increase to 2 percent. December's rate means Inflation in the Eurozone ended 2010 above the Central Bank's target of ...

Venezuela prices up after new devaluation
CARACAS, Venezuela, Jan. 3 (UPI) -- Consumer prices soared in Venezuela as the government of President Hugo Chavez devalued the bolivar and the currency fell further against the U.S. dollar on traditional unofficial markets. It was the second Venezuelan devaluation in 12 months and follows the second Central Bank annual report in the same period confirming the Latin American country's economy continues to shrink despite its oil wealth, international trade and recovery from severe drought last ye...

ECB government bond buys drop
Data from the European Central Bank shows it bought €164 million ($218 million) in bonds from governments with shaky finances in the week that ended on Dec. 31, as pressure to fight the region's Debt crisis abated over the holidays. Monday's figure compare with €1.121 billion in investments in Government Bonds a week earlier, but the week between Christmas and New Year's only had three full trading days where volumes were low. The Central Bank started buying the bonds from highly ind...

Fed Likely to Add New Dealers for Treasury Market
Yahoo! Buzz After a hiatus of more than one year, the Federal Reserve is likely to expand a select group of dealers to help with hefty Treasury Debt sales and the Central Bank’s monetary-policy operations, according to traders and dealers familiar with the matter. Demand for safe-haven Treasurys has eased over the past couple of months as optimism over the Economic Outlook sparked more buying interest in riskier assets such as stocks. That means dealers need to play a bigger role in underw...

Central banks underpin euro and diversify toward "other currencies"
The IMF released its Q3 2010 Currency Composition of Official Foreign Exchange Reserves (COFER) report. The COFER database provides the breakdown of official Central Bank portfolio holdings by currency across advanced and emerging/developing market economies. The picture is roughly half complete, as 44% of the global reserve positions go unallocated. But the trend in reported FX holdings indicates that central banks are supporting the euro, giving it a lower bound. Furthermore, there has been ...

Hugo Chavez Takes Over the Federal Reserve
Time was when countries believed in strong currencies — strength measured not in the Rhetoric of bearded wise men but of bank vaults flush with gold coin. Venezuelan tyrant Hugo Chavez recently announced that he would be devaluing his currency on New Year’s day.  As the Wall Street Journal reported: News of the devaluation came just after the Central Bank said the Venezuelan economy contracted 1.9% in 2010, the second consecutive year of declining output in the oil-rich nation after a...

Ambrose Evans-Pritchard On The Banking Rescue In Vietnam That Will Trigger The 2011-2012 Asian Hard Landing
Email Sent! You have successfully emailed the post. Ambrose Evans-Pritchard has painted his nightmare outline of what 2011 will look like around the world, and there's no comfort here for investors, beyond those focused on Norway. Japan falls back into Recession, Debt position gets worse, country gets downgraded. China and India may end up with Stagflation that turns their hungry populations against them. Vietnam's banking system will need a rescue, triggering the 2011-2012 Asia hard landing. H...

Greece To Build Anti-Migrant Fence Along Section Of Turkish Border
Greece on Monday announced plans to build an 8-mile long fence along a section of its land border with Turkey to keep out illegal migrants. The Border Fence plan was announced by Public Order Minister Christos Papoutsis, who claimed that more than 100,000 illegal migrants had entered Greece though the porous border with Turkey just last year alone. Pointing out that Greece has reached its limit in taking in illegal migrants, Papoutsis stressed that his government was determined to build the bo...

What's Pushing Down Treasury Bonds? A Rising U.S. Economy
Stocks may be poised to deliver their best December performance in almost two decades, but it's the machinations in the Bond Market that have been captivating investors recently. The question on market-watchers minds is this: Does the recent rapid rise in yields on U.S. Government Bonds signal a return to economic normalization, or are the nation's creditors finally getting fed up with financing soaring U.S. Deficits? Both sides saw evidence to bolster their views this week. The doomsayers g...

Benchmark JGB yield closes higher as stocks rally+
TOKYO, Jan. 4 (AP) - (Kyodo)—The yield on the benchmark 10-year Japanese Government Bond closed higher Tuesday as strong gains in Tokyo stocks triggered selling of safer assets. The yield on the No. 312, 1.2 percent issue, the main yardstick of long-term Interest Rates, ended interdealer trading up 0.040 percentage point from Thursday's close to 1.160 percent. The Bond Market was closed from Friday through Monday for Japan's New Year holidays. The price of the March futures contract for 1...

How to Navigate the Bond Market in 2011
Related Articles 9 Strategies for This (Or Any) Market 50 Ways to Improve Your Finances in 2011 8 Investing Resolutions for 2011 The 100 Best Mutual Funds for the Long Term The outlook for the Bond Market in 2011 remains uncertain. Recently, treasury yields have moved upward, causing some investors to panic and forecasters to call for the end of the bond market's bull run. The big question: whether or not Interest Rates (and bond yields) will rise in the new year. That will depend on a num...

EU debate over 'economic government'
BRUSSELS, Jan. 3 (UPI) -- France and Germany are at odds over a proposal to address the euro crisis by replacing the existing rescue fund with a permanent mechanism, officials say. France wants to combat the problem by seeing the European Council -- made up of the heads of state and government of EU Member States -- turned into a sort of "economic government," Germany's Der Spiegel magazine reported. French Finance Minister Christine Lagarde says EU states should have to harmonize not only their...

Governments Help Markets Score Big in 2010...
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2011: Another Year Of Folks Getting Screwed Betting Against Japan
Email Sent! You have successfully emailed the post. 2010 was supposed to be the year that Japan finally broke, and Hedge Funds finally made good on their "career trades" shorting Japanese Government Bonds (JGB) or the yen. Well, that was a total flop, but it already sounds like the drop-dead date for Japan has just been set at some unknown time in 2011. Last week various pundits including Felix Salmon, Megan McArdle, and Matt Ygliesas talked about the country's so-called "Fiscal Disaster" and t...