Yields fell across the region while France and Spain got off auctions without any problems…

No baby sitters for Greece….

“China’s manufacturing expanded at a faster pace in February and a gauge for India showed sustained growth, indicating that Asian economies are maintaining momentum even asEurope’s debt crisis caps exports.

In China, the purchasing managers’ index rose for a third month to 51.0 from 50.5 in January, the statistics bureau and logistics federation said in a statement today. In India, a PMI released by HSBC Holdings Plc and Markit Economics was close to an eight-month high.

Today’s data, along with a surprise gain in Japanese companies’ capital spending and South Korea’s biggest increase in exports in six months, add to signs that global growth prospects are improving as the U.S. recovery strengthens and Europe works to contain its debt crisis. Asia’s benchmark index entered a bull market yesterday, led by gains in China Shipping Container Lines Co.

“Pent-up demand will produce an export-led bounce in Asian economic activity” now that Europe’s debt turmoil is receding, said Tim Condon, chief Asia economist at ING Financial Markets in Singapore, which accurately forecast today’s China PMI. result.

In China, the PMI’s level, above the expansion-contraction dividing line of 50, was the highest since September and compares with the 50.9 median estimate in a Bloomberg News survey. Economic data in the first two months are distorted by the weeklong Chinese New Year holiday.

A separate manufacturing index released today by HSBC Holdings Plc and Markit Economics rose to 49.6 in February from 48.8 the prior month, the third straight improvement and the highest since October….”

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“Seven states have passed legislation officially recognizing companies with a conscience. Called benefit corporations, or B Corps, the firms strive to make a positive impact on society while also turning a profit. Economics correspondent Paul Solman reports as part of his Making Sen$e of financial news series.”

Watch

Source

“China’s “property bubble” is alive and well. Even as new home prices in Shanghai declined 5.7% last week, home sales have spiked. Property developers’ margins are certainly high enough so that they can offer discounts in order to increase volumes.

Shanghai Daily: Over the last seven days the sales of new homes, excluding government-funded affordable housing, surged 68.3 percent from the previous week to 140,400 square meters, according to a report by Shanghai Deovolente Realty Co.

A rumor has been widely circulated recently that the authorities will permit people who do not have a permanent residence but have lived in the city for three years to purchase a second property.  Many non-residents went shopping.

Property Wire: China’s financial centre Shanghai has eased home purchase restrictions to allow a broader pool of buyers to purchase a second property.

The city has decided to allow residence permit holders who have lived in the city for at least three years to buy a second home, according to a source at the city’s housing regulator.

It previously limited the second home option to locals, or those born in the city or who worked for an extended period of time and were officially recognised as locals, without specifying guidelines for non locals.

But today it seems the authorities have either denied or backed away from this policy. This is quite telling, as it may indicate the central government’s concern about a renewal of the property bubble. With signs of property markets heating up again, the policy my now be shifting away from easing existing curbs on home purchases. Liquidity remains high, while investment opportunities outside of the property markets are quite limited, particularly given current inflation levels. Many who “missed the bottom” in 2008 are now looking to buy in fear of missing the “bottom” again. Even the Beijing market is picking up.

China Daily: According to industry watchers, the property market has been warming up. Property sales in Beijing and Shanghai, for instance, both rebounded last week.In Beijing, 2,186 new and second-hand apartments were sold last week, up 30.2 percent week-on-week, according to the municipal government.”

“Italian and Spanish two-year notes rose as the European Central Bank lent financial institutions more three-year cash than economists predicted, fueling bets the extraordinary loans will be used to buy the nations’ debt.

The advance drove the Italian two-year yield to a 15-month low. The ECB will lend 800 financial institutions 529.5 billion euros ($711 billion) through its longer-term refinancing operation, more than the 470 billion-euro median of 28 estimates in a Bloomberg survey. German bunds were little changed as the country sold 3.26 billion euros of 2022 securities and a report showed unemployment stayed at the lowest in more than two decades last month.

“What we saw after the first LTRO is likely to develop further, with yields falling, and it will be no surprise to see further support for Italian and Spanish bonds,” said Patrick Jacq, a senior fixed-income strategist at BNP Paribas SA in Paris. “Demand was relatively strong and far stronger than the demand we saw in December.”

The Italian two-year note yield fell 24 basis points, or 0.24 percentage point, to 2.20 percent at 11:39 a.m. London time, the lowest rate since Nov. 8, 2010. The 2.25 percent note due November 2013 gained 0.38, or 3.80 euros per 1,000-euro face amount, to 100.095. That’s the first time the price of the securities has climbed to more than 100 cents on the euro.

Spain’s two-year notes advanced for a 10th consecutive day, with the yield dropping 11 basis points to 2.34 percent.

Unlimited Loans

Italy’s government note yields have tumbled about 4 percentage points since the ECB announced its plan to offer unlimited loans for three years on Dec. 8.

“An obvious use of LTRO funding is to purchase government bonds paying higher rates,” Fitch Ratings said in an e-mailed report yesterday. “Sovereign spreads showed a marked decline following the LTRO” in December, it said.

Germany’s 10-year bond yield was at 1.80 percent after fall to 1.78 percent yesterday, the lowest since Jan. 31…”

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The ECB had a range of 300-800 billion Euros. Finding the right number is what bulls were worried about. It appears from the markets reaction that they found the right number to lend in order not to upset markets.

Full article

“The European Central Bank’s second and final 3-year, long-term refinancing operation is coming tomorrow and while analysts are finalizing their bets on the take-up, they generally agree on one thing: The optimism is over.

The ECB’s massive liquidity operation has effectively removed the possibility of a banking crisis in the short term by averting a liquidity crisis and giving banks tons of cheap cash. Consequently, Spanish and Italian banks in particular purchased vast amounts of Italian and Spanish debt, as those bonds can be used as collateral against borrowing from the central bank.

That’s all been positive in the short run. In fact some optimists even suggested that this could bring an end to the crisis by relieving so much pressure off the banks.

But by now, everyone’s recognized that there are major flaws in this argument.

Italy and Spain

Italian and Spanish banks have borrowed from the ECB in record quantities and appear to have made sizable investments in domestic sovereign debt because they can make a profit off the difference between the interest rate on that debt and the one percent interest charged by the ECB.

This makes a lot of sense; if one of the countries were allowed to default, domestic banks would be dealing with complete economic collapse. Default on sovereign bonds would prove just a trivial piece of a much greater catastrophe.

In a closed economy, increasing domestic bank exposure to sovereign debt in order to pull an economy out of a trouble spot makes sense. So long as banks are there to buy up government debt, the government can issue as much debt as it wants and always find buyers. It can even give money to fund people and businesses and that excess money will eventually find its way back through the system as it’s pumped through the financial system via saving and lending.

Even in an economy with a single currency, currency risk will discourage (though not completely deter) investors (people, businesses, and banks) from putting money abroad.

The structure of the eurozone, however, completely eliminates this currency risk, and in fact encourages investors in one country to keep their money in another if its economic prospects are better. And despite currency risk, the prognosis for the euro area—and thus the euro—is so uncertain in the long term that many investors are willing to overlook the currency risk of holding American or Japanese assets because of the assurance that those investments will be worth something someday.

This chart illustrates what’s going on.

Simone Foxman for Business Insider

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“Chancellor Angela Merkel won a parliamentary vote on Greek aid after warning German lawmakers that pushing Greece out of the euro would risk “incalculable” damage, defying a public backlash against more bailout funds.

In a ballot that showed dissent in her coalition growing, 496 members of the lower house, or Bundestag, backed the 130 billion-euro ($174 billion) package yesterday in Berlin; 90 voted against and five abstained. While questions on Greece’s remaining in the euro “have their justification,” Merkel warned that a failure of the euro might endanger the European Union and the global economy.

“Angela Merkel’s strident insistence that bailing out Greece is vastly preferable to the alternative was important,” Kit Juckes, head of foreign-exchange research at Societe Generale SA, said in a note today as he forecast the euro rising to $1.50. “Europe’s leaders have always stepped back from the edge of the abyss after flirting with disaster.”

Merkel’s government pushed through the measure to stave off a collapse of the Greek economy amid signs of growing resistance and as one of her Cabinet ministers said Greece should leave the single currency. Euro leaders will now shift their focus on whether to bolster the region’s bailout firewall as they prepare for a summit meeting in Brussels on March 1-2….”

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Perhaps not yet, but it appears their debt bubble is not looking good going forward…

“MADRID—Spain’s new government said the country will miss its budget-deficit target by a wide margin, and announced spending cuts and tax increases of about €15 billion ($19.4 billion) to stem the tide of red ink.

One week after conservative Prime Minister Mariano Rajoy took his o

ath of office, his government said Spain’s budget deficit will be about 8% of gross domestic product in 2011—well above the 6% target the previous government of Socialist Prime Minister José Luis Rodríguez Zapatero committed to with the European Union and financial markets.

The overrun makes Spain the latest country on the euro zone’s fiscally frail periphery to stumble in attempts to close a yawning budget gap. Portugal, Italy and Greece have all been forced to push through austerity measures in recent months.

On Friday, Madrid proposed about €8.9 billion in spending cuts for 2012 that ranged from trimming public-sector employment to curbing subsidies for political parties.

The government also went back on a campaign pledge of Mr. Rajoy’s and approved tax increases of about €6 billion. The total budget adjustment represents about 1.5% of GDP.

“We weren’t in favor of tax hikes,” government spokeswoman Soraya Sáenz de Santamaría said at a news conference. “They were forced by the size of the [budget] gap we encountered.”

Spain’s latest measures will likely be insufficient to slash the budget deficit from 8% of GDP in 2011 to the target of 4.4% in 2012, a gap of about €36 billion. The government will present a new 2012 budget in March.

Ms. Sáenz de Santamaría hinted more austerity measures will come. “The government has started to take measures; this is the beginning of the beginning,” she said…”

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http://www.youtube.com/watch?feature=player_embedded&v=QZlv9Ekb9QA

Moscow (CNN) — A plot to assassinate Russian Prime Minister Vladimir Putin has been foiled, Russia’s state-run Channel One TV reported Monday, less than a week before presidential elections that Putin is expected to win.

Citing unnamed sources, the report said a group of plotters was arrested in the Ukrainian city of Odessa in early January and, after weeks of questioning, confessed to planning to kill the Russian leader.

The TV report included what it said was a confession by Adam Osmayev, a fixer associated with the two men who were seized in Odessa.

“Our final goal was to come to Moscow and try to organize an attempt on Prime Minister Putin,” Osmayev said.

Putin promises military spending He said the plan involved using military-grade land mines to blow up vehicles.

Read here:

The World Bank and a Chinese think tank have a stern warning for China’s government: transition to a freer market system, or else face an economic crisis.

The “China 2030” report, released by the World Bank on Monday, recommends China enact reforms promoting a freer economy. Those reforms include a major overhaul turning China’s powerful state-owned companies into commercial enterprises.

“China could postpone reforms and risk the possibility of an economic crisis in the future — or it could implement reforms proactively. Clearly, the latter approach is preferable,” the report said.

The report is compiled by the World Bank and the Development Research Center, a research group that reports directly to China’s State Council. It encourages China to promote innovation, competition and entrepreneurship as means of economic growth, rather than allowing growth to be primarily government engineered.

The world’s second-largest economy has been rising rapidly, averaging around 10% growth a year for the last three decades. Much of that momentum has come as China’s rural population moves into the cities and as the government has funded massive infrastructure projects and retained a powerful influence over the country’s biggest companies.

State-owned companies dominate China’s banking, energy, telecom, health care and technology sectors. Overall, they account for about 40% of the country’s gross domestic product, according to Andrew Szamosszegi and Cole Kyle, who have researched the topic for the U.S.-China Economic and Security Review Commission.

Their latest report to the commission puts it bluntly: The Chinese government has not “expressed an interest in becoming a bastion of free market capitalism.”

“The bailout that rescued Greece from a looming default has failed to restore confidence in credit markets, where traders are paying nine times more to insure European government bonds than they are for Treasuries.

While European stocks are off to their best start since 1998, the relative cost of credit default swaps has risen to a record, more than double the July level, according to CMA. To obtain 130 billion euros ($175 billion) in aid to help pay interest on bonds due March 20, Greek Prime Minister Lucas Papademos agreed to reduce debt to 120.5 percent of gross domestic product by 2020 from about 160 percent last year.

While chances of defaults and the breakup of the euro may have diminished, investors are no longer rewarding European governments for reducing spending to cut debt as their economies shrink. U.S. bond yields have stayed near record lows and growth is accelerating as President Barack Obama uses a different strategy, more than doubling the amount of outstanding debt to $10 trillion to fuel the recovery.

“Bond markets don’t believe in the same story that stock markets do,” Robin Marshall, director of fixed income in London at Smith & Williamson Investment Management, which oversees about $18 billion, said in a Feb. 22 interview. “Countries are still saddled with huge debt, are facing either economic downturn or recession.”

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By JAMES RISEN and MARK MAZZETTI

WASHINGTON — Even as the United Nations’ nuclear watchdog said in a new report Friday that Iran had accelerated its uranium enrichment program, American intelligence analysts continue to believe that there is no hard evidence that Iran has decided to build a nuclear bomb.

Recent assessments by American spy agencies are broadly consistent with a 2007 intelligence finding that concluded that Iran had abandoned its nuclear weapons program years earlier, according to current and former American officials. The officials said that assessment was largely reaffirmed in a 2010 National Intelligence Estimate, and that it remains the consensus view of America’s 16 intelligence agencies.

At the center of the debate is the murky question of the ultimate ambitions of the leaders in Tehran. There is no dispute among American, Israeli and European intelligence officials that Iran has been enriching nuclear fuel and developing some necessary infrastructure to become a nuclear power. But the Central Intelligence Agency and other intelligence agencies believe that Iran has yet to decide whether to resume a parallel program to design a nuclear warhead — a program they believe was essentially halted in 2003 and which would be necessary for Iran to build a nuclear bomb. Iranian officials maintain that their nuclear program is for civilian purposes.

Read the rest here.

via BBC NEWS

Tropical fish plot cocaine smugglers jailed

Olaf Urlik and Norbert Jarzabek tried to smuggle cocaine with a street value of about £1.6m to Nottingham from Colombia

_____________________

Two men have been jailed for trying to smuggle cocaine with a street value of £1.6m from Colombia to Nottingham in bags of tropical fish.

Olaf Urlik, 33, and Norbert Jarzabek, 32, both from Poland, admitted conspiracy to import Class A drugs at an earlier hearing on 5 January.

The cocaine was dissolved in fluid in plastic bags within larger bags holding the fish, thousands of which died.

Urlik and Jarzabek were both jailed for 11 years at Nottingham Crown Court.

Last April, Urlik and Jarzabek carried out a trial run without the cocaine in which all 16,000 fish were left to die, the Serious Organised Crime Agency (Soca) said.

‘Very poorly’Jarzabek and a friend from Strelley, Nottingham, collected the consignment and took it to a lock-up garage in Islington, north London, where the fish were abandoned.

A second cargo, plotted by Urlik and Jarzabek and containing 17kg (37lb) of cocaine, arrived at Heathrow Airport on 9 July last year labelled “Live Tropical Fish, Handle With Extreme Care”.

The fish were in intensive care at London Zoo for several weeks

It contained 25 double boxes of almost 550 tropical fish.

Soca and UK Border Agency found 10 of the boxes to have dissolved bags of cocaine stored in the water with the fish.

The fish were left for two days at the airport before being picked up.

Once the boxes were collected they were taken to a flat on Glade Avenue, Nottingham, which Jarzabek had rented a month before.

Investigating Soca officers arrested the men at the property with the evidence.

The fish had limited oxygen for at least 96 hours and many were found dead or lay dying. Only 26 survived and were taken to London Zoo for treatment.

The fish are now in an aquarium at the zoo.

Rachel Jones, team leader of the aquarium, said the case was “really quite unusual”.

“We do work with the authorities to take confiscations but they’re usually of marine creatures like corals.”

She said the fish were “very poorly” when they first arrived and were in intensive care for several weeks.

“They were really skinny and they’d been in terrible water quality for many, many days.

“A lot of TLC was involved in encouraging them to feed. Now they’re quite plump and doing really, really well,” she said.

Nobody is trying to be a hater; just pointing out some interesting facts.

A f’d up story that you as a consumer should think about when purchasing any product. Know where and how your stuff comes from!

A minor bank run continues under the stress of the sovereign debt crisis….