The Swiss franc rose against all of its 16 most-traded peers, reaching a record against the euro, as investors sought safety on concern an austerity plan to stabilize Greece won’t resolve Europe’s sovereign-debt crisis.

The dollar gained for a third week against the euro, the longest since February, on speculation Greece’s parliament may reject Prime Minister George Papandreou’s plan to cut the budget deficit, win more aid and avoid default. The pound slid for a fourth week against the dollar after U.K. policy makers discussed more monetary stimulus. Growth in U.S. manufacturing cooled in June, a report next week may show.

“All these headlines continue to add to uncertainty and nervousness amongst investors and continue to create the choppy price action that we’ve been seeing,” said Paresh Upadhyaya, head of Americas G-10 currency strategy at Bank of America Corp. in New York. “Just as you feel you’re on top of the Greek situation, you get thrown a curve ball.”

The franc touched 1.1806 versus the euro yesterday, the strongest level since the shared currency’s 1999 debut. It gained 2.6 percent for the week to 1.1826 per euro, from 1.2142 on June 17. The franc gained 1.8 percent to 83.31 centimes per dollar, from 84.82 centimes a week earlier.

FULL FX ROUNDUP AT BLOOMBERG

The Chinese premier, Wen Jiabao, has thrown the eurozone a vital lifeline and pledged to buy billions of euros of European debt to keep the single currency project alive.

Wen Jiabao, the Chinese premier, made the offer of help for the eurozone abefore boarding a flight to Britain for a three-day visit.

The move, which will be a relief to struggling eurozone countries including Greece, Portugal and Ireland, was announced as Mr Wen continues his four-day trip to Europe, arriving in Britain last night from Hungary and going on to Germany on Monday night.

China’s plan to continue to invest in the continent’s volatile sovereign debt market comes as efforts continue to prevent Greece’s financial crisis making it the first nation to be forced out of the euro.

“China is a long-term investor in Europe’s sovereign debt market,” Mr Wen said at a press conference with the Hungarian prime minister, Viktor Orban.

“In recent years we have increased by quite a big margin our holdings of government bonds. We will consistently continue to support Europe and the euro.”

He added: “China is ready to work with Europe to share opportunities, cope with challenges and achieve common development and to make unremitting efforts for stable development of the world economy and an in-depth development of China-Europe ties.”

FULL ARTICLE

How ethanol production wastes corn.

FEELING the need for an example of government policy run amok? Look no further than the box of cornflakes on your kitchen shelf. In its myriad corn-related interventions, Washington has managed simultaneously to help drive up food prices and add tens of billions of dollars to the deficit, while arguably increasing energy use and harming the environment.

Even in a crowd of rising food and commodity costs, corn stands out, its price having doubled in less than a year to a record $7.87 per bushel in early June. Booming global demand has overtaken stagnant supply.

But rather than ameliorate the problem, the government has exacerbated it, reducing food supply to a hungry world. Thanks to Washington, 4 of every 10 ears of corn grown in America — the source of 40 percent of the world’s production — are shunted into ethanol, a gasoline substitute that imperceptibly nicks our energy problem. Larded onto that are $11 billion a year of government subsidies to the corn complex.

Corn is hardly some minor agricultural product for breakfast cereal. It’s America’s largest crop, dwarfing wheat and soybeans. A small portion of production goes for human consumption; about 40 percent feeds cows, pigs, turkeys and chickens. Diverting 40 percent to ethanol has disagreeable consequences for food. In just a year, the price of bacon has soared by 24 percent.

To some, the contours of the ethanol story may be familiar. Almost since Iowa — our biggest corn-producing state — grabbed the lead position in the presidential sweepstakes four decades ago, support for the biofuel has been nearly a prerequisite for politicians seeking the presidency.

Those hopefuls have seen no need for a foolish consistency. John McCain and John Kerry were against ethanol subsidies, then as candidates were for them. Having lost the presidency, Mr. McCain is now against them again. Al Gore was for ethanol before he was against it. This time, one hopeful is experimenting with counter-programming: as governor of corn-producing Minnesota, Tim Pawlenty pushed for subsidies before he embraced a “straight talk” strategy.

FULL ARTICLE AT THE NY TIMES

Note prices in article refer to Brent Crude

The oil price dropped a further $4 per barrel in London on worries about the stability of the eurozone and the word’s economic health.

The second day of dramatic oil price drops follows the global energy watchdog’s decision to release an extra 60m barrels of oil on to the market.

Oil and other commodities came under pressure as the dollar rose against the euro, driven by concerns that Greece’s parliament may not pass austerity measures that will release an international bail-out.

The second day of dramatic drops follows the global energy watchdog’s decision on Thursday to release an extra 60m barrels of oil on to the market over the next month.

The International Energy Agency’s move to sell 2m barrels of oil per day sparked an immediate sell-off, with oil falling $5 that day. It dropped a further $4, or 4pc to just under $105 per barrel on Friday.

FULL ARTICLE

The debt crisis enveloping the eurozone is “the most serious and immediate” threat to the British economy, according to the first report from the UK’s Financial Policy Committee.

The FPC was clear that the Greek debt crisis could spread, setting off a wider crisis that risked embroiling the UK financial system.  Photo: BLOOMBERG

Sir Mervyn King, Governor of the Bank of England and one of the founder members of the Committee, said the worsening financial problems of several European countries risked damaging British banks, even if they had little or no exposure to their indebted economies.

FULL ARTICLE

* Cushing crude to move via barge to US Gulf Coast

* Petro Source hopes to ship 150,000 bbls/month (Rewrites, adds details)

By Janet McGurty

NEW YORK, June 14 (Reuters) – The glut of crude trapped in the middle of the United States is set to ease by just a little bit in the coming weeks as several big barge operators make headway in shipping landlocked oil to the Gulf Coast.

After nearly six months of an unprecedented gap between cheap Canadian and U.S. mid-continent crude versus coastal rivals, several new efforts to break the logistical bottleneck that prevents that crude from being shipped south by pipeline are coming to fruition, operators say.

Privately held Petro Source LLC is set within weeks to begin shipping about 150,000 barrels a month — or about 5,000 bpd — from the Port of Catoosa in Oklahoma down to the Saint James, Louisiana, area.

And Kirby Corp (KEX.N), the nation’s largest inland tank barge operator, said it had begun moving crude by barge from the U.S. Midwest region to the Gulf Coast for the first time. [ID:nWEN4321]

FULL ARTICLE



Goldman Sachs took a stab at solving an oil market mystery.

For months, the discount of West Texas Intermediate crude at Cushing, the U.S. benchmark, to North Sea Brent, has been lingering around $15 a barrel. In recent days, it has suddenly taken another gap wider to a record of $21.80 a barrel on Monday. (It narrowed a bit on Tuesday to $20.57.)

But for once, the huge gap may not be the Cushing, where the tanks are have been brimming with oil for months, depressing WTI prices and keeping the spread wide.

Inventories at Cushing have actually been falling a bit lately, which should mean WTI prices are moving up against Brent, narrowing that spread.

The culprit, Goldman analysts, say is further south – in Louisiana, where light sweet crude oil prices are trading weirdly in relation to their Brent counterparts.

FULL ARTICLE

Saudi Arabia signaled it’s ready to deliver on a pledge to boost the supply of oil after the collapse of OPEC talks two days ago.

The world’s largest oil exporter will increase production, though it’s too early to say by how much, a Saudi industry official with knowledge of the matter who declined to be identified said today. Al-Hayat, citing senior officials, reported earlier that the kingdom will boost output to 10 million barrels a day in July from the current 8.8 million. Oil fell as much as 3.3 percent, the most in three weeks.

Saudi Arabia “wants everyone to understand that they’re serious,” Olivier Jakob, an analyst at Petromatrix GmbH in Zug, Switzerland, said today by phone. “It’s important that the Saudis are signaling that they’re offering additional barrels.”

FULL ARTICLE

By MICHAEL RAPOPORT

Interactive Brokers Group Inc. is barring its clients from using borrowed money to buy the shares of more than 130 Chinese companies in the wake of recent worries about accounting irregularities at China-based firms.

The Greenwich, Conn., electronic brokerage says on its website that it is making the move because of “elevated risk concerns.”

In recent months, dozens of Chinese companies have acknowledged problems with their accounting. The Securities and Exchange Commission has said it is investigating accounting and disclosure issues at Chinese companies that list on U.S. exchanges through “reverse mergers,” arrangements that can avoid the regulatory scrutiny that comes with an initial public offering. Stocks of some of these firms have tumbled this year.

The brokerage firm’s move, phasing in this week, bars investors from buying stocks on the list on “margin,” or with money borrowed from the brokerage. If a stock bought on margin declines sharply—as some China stocks have lately—a brokerage could have trouble getting its loans repaid and might seize an investor’s holdings as collateral.

The Interactive Brokers list numbers 159 securities from 132 companies. About 90 stocks are U.S.-traded; the rest trade on exchanges in Germany, Canada or other countries.

This isn’t the first time Interactive Brokers has made such a move. In April, the firm put dozens of other reverse-merger Chinese stocks on its no-margin list.

A spokesman for Interactive Brokers declined to comment.

Interactive Brokers tends to attract active traders. Last week, the firm reported daily average revenue trades, or DARTs, of 420,000 for May, a figure roughly on par with those posted for April by TD Ameritrade and Charles Schwab, even though Interactive has a customer base of only 173,000, compared with accounts in the millions at its rivals.

FULL STORY

Losses From Wrong-Way Bet on Investment Bank’s Bonds Exceed $3.4 Billion

Bond-investing veteran Bill Gross buoyed his reputation during the 2008 financial crisis through well-timed bets on Treasurys and mortgage debt.

Now, new court documents show that he also took a bath in loading up on Lehman Brothers Holdings Inc. debt before the investment bank cratered that year.

Losses on certain Lehman bonds traded by Mr. Gross’s firm, Pacific Investment Management Co., exceed $3.4 billion, according to a Wall Street Journal analysis of liquidation plans and investment disclosures filed in a federal bankruptcy court in New York.

Pimco is among the nation’s largest money managers for mainstream Americans, both through institutional clients, such as pension funds, and mutual funds held in 401(k) retirement accounts. That means the Lehman losses hit ordinary investors who had put their money into Pimco funds during the market boom.

FULL ARTICLE AT WSJ

Carson Block, a gangster rap enthusiast who doesn’t like to give his exact address because he said he’s received death threats, is taking responsibility for billions of dollars in stock declines that have left everyone from John Paulson to Hank Greenberg nursing losses.

Sino-Forest Corp. (TRE), an operator of timber plantations backed by Paulson & Co., plunged 71 percent in two days last week after Block’s Muddy Waters Research said it was betting against the shares. Paulson, whose New York-based hedge fund earned $15 billion in a single year while Block was developing a company called Love Box Self Storage in Shanghai, may have lost $325 million on Toronto-traded Sino-Forest.

“There are going to be people who say, well, I caused this,” Block said in a telephone interview from Hong Kong. “In one sense, yes, had I not published on that date, then the money would not have been lost. But on the other hand, I really feel that this company is a cancer on the financial system, because it just keeps sucking in more money every year.”

Block made a name for himself with China MediaExpress Holdings Inc. (CCME) and Rino International Corp. (RINO), saying they manipulated financial statements. China MediaExpress counted former American International Group Inc. Chief Executive Officer Greenberg’s C.V. Starr & Co. as a top owner. The shares have slid 93 percent since Block’s February report. Rino said in November that its financial statements were unreliable, less than two weeks after Block published his statements, and is down 96 percent.

‘Shock Jock’ READ FULL ARTICLE

The euro rose toward a one-month high against the dollar after European Central Bank President Jean- Claude Trichet indicated his willingness to sanction bond rollovers in Greece. Asian commodity stocks declined as copper snapped a two-day rally and oil fell before OPEC meets tomorrow.

The euro climbed 0.3 percent to $1.4612 as of 3 p.m. in Tokyo. The Australian dollar reversed gains after the central bank left interest rates unchanged. Gauges of materials and energy stocks the biggest drags on the MSCI Asia Pacific Index, which was little changed. Standard & Poor’s 500 Index futures added 0.3 percent, following a four-day slump in the measure. Euro Stoxx 50 Index futures slipped 0.5 percent. Copper sank 0.5 percent in London. Crude decreased 0.4 percent in New York.

FULL ARTICLE

The intensity of Main Street’s animosity for Goldman Sachs (ticker: GS) is chilling, while Wall Street’s mild reaction to the latest legal attack on the bank shows how divided the country has become.

“Kill Goldman to send a message to the rest of Wall St.,” was the comment posted by someone calling himself Gaius Baltar on a Wall Street Journal story. The article detailed how Manhattan’s district attorney, Cyrus Vance Jr., son of a former secretary of state, subpoenaed the powerful bank in response to a Senate report, “Wall Street and the Financial Crisis: Anatomy of a Financial Collapse.”

FULL ARTICLE

How FIFA’s Fouls May Revive the Beautiful Game

: David Goldblatt

Barcelona’s victory over Manchester United in this year’s Champions League final will go down as one of the finest displays of soccer that the modern era has witnessed. But, for a performance of true audacity, for a story that captures the essence of contemporary soccer, the Catalans have been eclipsed by the games being played inside FIFA — the sports global governing body — and above all by Sepp Blatter, who was just re-elected as FIFA’s president.

FULL ARTICLE

General Electric Co. (GE) led companies in urging Congress to spur U.S. production of rare earths, needed for wind turbines, aircraft engines, medical devices and cell phones, and to reduce dependence on supplies from China.

Congress is considering two bills that would require the Interior Department to report on U.S. mineral resources and production limits. Lawmakers led by Representative Henry Johnson, a Georgia Democrat, also want the U.S. to consider risks of disruptions in rare-earth supplies from overseas.

FULL ARTICLE

June 04, 2011, 5:42 AM EDT

By Svenja O’Donnell

June 4 (Bloomberg) — The Bank of England will hold off increasing its benchmark interest rate next week as manufacturing and services surveys this week indicate the economic recovery is faltering.

The nine-member Monetary Policy Committee, led by Governor Mervyn King, will leave the key rate at a record low of 0.5 percent on June 9, according to all 55 economists in a Bloomberg News survey. It will also keep its bond-purchase plan at 200 billion pounds ($326 billion), said all 35 economists in a separate poll.

FULL ARTICLE

As I’ve noted for years, the government has been guaranteeing that the big banks make money at taxpayer expense by loaning money at very low interest rates, and then letting the banks loan the money back to the government at much higher interest rates.

For example, as I pointed out in January:

Bloomberg notes:

“The trading profits of the Street is just another way of measuring the subsidy the Fed is giving to the banks,” said Christopher Whalen, managing director of Torrance, California-based Institutional Risk Analytics. “It’s a transfer from savers to banks.”The trading results, which helped the banks report higher quarterly profit than analysts estimated even as unemployment stagnated at a 27-year high, came with a big assist from the Federal Reserve. The U.S. central bank helped lenders by holding short-term borrowing costs near zero, giving them a chance to profit by carrying even 10-year government notes that yielded an average of 3.70 percent last quarter.

FULL POST

British shoppers seem to be suffering from “Stockholm Syndrome”, according to new analysis explaining their happiness with supermarkets despite rising food prices.

Many people do not realise climbing food bills are not simply a case of supermarkets passing on their own rising costs, the fund manager argued.

FULL STORY

Mike “Mish” Shedlock, Global Economic Trend Analysis

Courtesy of Google translate please consider They lifted 1.5 billion Thursday and Friday from bank

Only a few steps separating from Friday to yesterday’s mass panic! From early morning to counter the banks there is serious pressure for withdrawals of deposits, especially small amounts. The pressure on banks began last Wednesday, culminating in yesterday’s day.

Read more

Has a run on  Credit Anstalt the Greek Banks begun?