The U.S.-China Currency and Trade Collision Course.”

By Nouriel Roubini:

In mid-April the U.S. Treasury is expected to publish its biannual report on currency arrangements of other countries. There is a higher probability than ever before that China will be branded a „currency manipulator.“ There is no doubt that China is manipulating its currency: After re-pegging to the U.S. dollar in the summer of 2008 and accumulating about US$400 billion dollar a year of additional FX reserves (which now stand, in total, near US$2.4 trillion), there is no doubt, from an economic standpoint, that manipulation is taking place. It looks like a duck and acts like a duck—it is clearly a Peking duck.

US stock market returns – what is in store?

By Dr. Prieur du Plessis

Surging stock markets since the lows of March 2009 have caught most investors by surprise, especially as new pieces of the economics puzzle are not always rosy and do not quite seem to support an overly bullish case. In short, investors are increasingly struggling to make sense of the most likely direction of stock prices.

Are we perhaps nearing the end of a cyclical bull phase in a structural bull market? Or will strong earnings growth ensure the longevity of the bull? Or is a „muddle-through“ trading range in store? It seems to be a case of so many pundits, so many views.

Euro Trashed

Ein Artikel von Joachim Starbatty, Prof. Emeritus an der Uni Tübingen

Date: 29-03-2010
 Source: The New York Times

Tübingen, Germany

THE European Monetary Union, the basis of the euro, began with a grand illusion. On one side were countries — Austria, Finland, Germany and the Netherlands — whose currencies had persistently appreciated, both within Europe and worldwide; the countries on the other side — Belgium, France, Greece, Italy, Portugal and Spain — had persistently depreciating currencies. Yet the union was devised as a one-size-fits-all structure. As a result, some countries had to use creative accounting to satisfy the fiscal criteria for entry — Greece, it’s long been known, went so far as to falsify its debt and deficit numbers.

Germany and other “euro-optimists” hoped that the introduction of a common currency and the global economic competitiveness it spurred would quickly lead to sweeping economic and societal modernization across the union. But the opposite has occurred. Rather than pulling the lagging countries forward, the low interest rates of the European Central Bank have lured governments and households, especially in the southern part of the euro zone, into frivolous budgetary policies and excessive consumption.

Implications of the EMU/IMF Greece Deal

RGE Strategy Flash: On March 25, the Heads of State of the Eurozone reached an agreement on the principles for emergency lending to sovereign states in the single currency area in the event of a state failing to raise funds in the capital markets. The agreement represents a victory for the German chancellor who—faced with fierce domestic opposition to any bailout of Greece—pushed for an IMF involvement against the prevailing consensus among the heads of the ECB, the Eurogroup and the EU Commission. While no numbers were released in the statement, the details of the fiscal “support” package with respect of Greece imply a majority EMU-financed joint EMU/IMF package. Specifically, there appears to be €22 billion in financing with the zone members providing about €15 billion of that amount, according to their ECB capital key, and the IMF the rest. RGE considers the current deal to be mixed for a number of reasons.

Germany: Mitteleuropa Redux

By Peter Zeihan, Stratfor

The global system is undergoing profound change. Three powers – Germany, Iran and China – face challenges forcing them to refashion the way they interact with their regions and the world. We will explore each of these three states in detail in our next three geopolitical weeklies, highlighting how STRATFOR’s assessments of these states are evolving. We will examine Germany first.

Germany’s Place in Europe

European history has been the chronicle of other European powers struggling to constrain Germany, particularly since German unification in 1871. The problem has always been geopolitical. Germany lies on the North European Plain, with France to its west and Russia to its east. If both were to attack at the same time, Germany would collapse. German strategy in 1871, 1914 and 1939 called for pre-emptive strikes on France to prevent a two-front war. (The last two attempts failed disastrously, of course.)

Fitch Cuts Portugal’s Sovereign Debt Rating to AA-: Another Greek Tragedy?

On March 24, Fitch cut Portugal’s sovereign debt rating by one notch from AA to AA- with a negative outlook, citing concerns about the economy’s fiscal consolidation targets given its weak economic recovery prospects. The downgrade reflects Portugal’s significant budget underperformance in 2009, when the budget deficit jumped to 9.3% from 2.8% in 2008. For 2010, the Portuguese government foresees only a gradual decrease in the deficit to 8.3% of GDP to avoid jeopardizing the economic recovery by prematurely withdrawing the fiscal stimulus. While Fitch judges the Portuguese fiscal plan to be largely credible, consolidation efforts will need to be stepped up given the gloomy economic outlook. In particular, Fitch regards the Portuguese government’s growth forecasts, which underpin the fiscal plan, as overly optimistic given the economy’s severe structural weaknesses and high indebtedness across all sectors. Fitch warned of further downgrades in the event of the government failing to change its fiscal stance.

The U.S.-China Currency and Trade Collision Course

RGE Analysis by Nouriel Roubini: Following my attendance at the annual China Development Forum, including a private session for Western delegates with Premier Wen Jiabao, I believe China and the United States may be on a collision course over Beijing’s insistence that it will not allow the value of the renminbi (RMB) to rise. While RGE believes the two countries may still come to a grudging compromise that falls short of public confrontation over the issue, there is now nearly a 50% chance that the U.S. Treasury will label China a currency manipulator in April. The risk of a collision course on the China’s currency peg and a wider trade rift between the world’s largest debtor and creditor nations has risen significantly in recent months, especially amid a reevaluation by the Obama administration of the cost-benefit analysis of taking aggressive action on China’s currency, a course White House advisors had previously hoped to avoid through private negotiations with senior Chinese leaders. Markets do not seem to be pricing in the potential consequences of the U.S. labeling China a currency manipulator, which could be significant even if both sides avoid taking immediate bilateral actions.

„Die finale Krise steht erst noch bevor“

Schulden, überall nur Schulden. Die Industriestaaten haben die Rettung ihrer maroden Banken teuer erkauft, dazu kommen hausgemachte Probleme. Investoren fürchten die nächste Staatspleite. Gleich mehrere südeuropäische Staaten seien gefährdet, sagen Experten. Aber auch die USA stehen tief in der Kreide. Das Schuldenproblem wird die Finanzmärkte in den kommenden Jahren.

aus dem „Handelsblatt“, 17.3. Siehe dazu 22 Aussagen von Meinungsbildnern.

US-Senator Kaufman: Wall Street “Crooks” in Knast schicken

By Roman | März 24, 2010. Aus „wirtschaftsfacts.de“

US-Senator Kaufman geht nach der Publikation neuer Erkenntnisse um die Insolvenz der Investmentbank Lehman Brothers in die Offensive. Öffentlich fordert er eine vollumfängliche Aufklärung der Geschehnisse, die im September 2008 und ebenfalls im Vorfeld des Ausbruchs der Finanzkrise abliefen, durch die juristischen Organe der Vereinigten Staaten und das FBI. Auf seiner Senatswebseite weist er überdies deutlich darauf hin, dass eine Rückkehr zu einer gesetzlichen Verschärfung der Kontrolle über das Finanzsystem kommen müsse, um zukünftig Schlimmeres zu verhindern. Die Verantwortlichen an dieser Krise seien nach Aufarbeitung ihrer Schuld endlich in den Knast zu schicken.

Auf seiner Senatswebseite schrieb Senator Kaufman zuletzt Folgendes. Zitat:

Gottwald Kranebitter übernimmt Ruder bei Hypo Alpe Adria

Nicht zu fassen!

• ein Mensch, der noch nie operativ ein Unternehmen, geschweige denn eine Bank geführt hat!

• bei der eigenartigen Rolle der KPMG als Prüfer (fast) aller österreichischen Banken

• auch der Global Corruption Report 2009 (Oct. 2009) spricht von „Corruption in the Austrian Bankling System“, und meint damit auch die Verfilzung von Politik, Nationalbank, FMA und den Wirtschaftsprüfern.

• spricht auch für die „Unabhängigkeit“ und Kompetenz des neuen Aufsichtsrates!

aus tt.com:

Die notverstaatlichte Kärntner Hypo hat ihre neue Vorstandsspitze. Kranebitter soll Franz Pinkl als Chef nachfolgen.  

Wien – In der Aufsichtsratssitzung am Mittwoch wird laut „Kurier“-Vorabbericht KPMG-Österreich-Geschäftsführer Gottwald Kranebitter zum neuen Vorstandschef der Hypo Alpe Adria gekürt. Er folgt damit auf Franz Pinkl, der nach nicht einmal einem Jahr zum Rücktritt bewogen wurde. Im Finanzministerium in Wien wollte ein Ministersprecher am Nachmittag keinen Kommentar abgeben. Man wolle der morgigen Aufsichtsratssitzung nicht vorgreifen.