Comments »Martin Wolf, chief economic commentator for the Financial Times and long time critic of the Eurozone is optimistic that something tangible will emerge from the crucial, critical, and “endlessly hyped” two-day summit between EU officials commencing today. Alas, tangible and effective are wholly different concepts.
Wolf says the options are simple: the Eurozone can do the bare minimum to ward off economic chaos or come up with a maximal, comprehensive solution that is obviously never going to happen. The half-baked option, according to Wolf, is to “give enough cover, in terms of longer run discipline and longer run reform… to allow the ECB to start intervening in government bond markets in a much more aggressive way”.
By way of translation, Wolf’s idea is akin America’s method for cutting our budget. First you posture, yell, argue and point fingers. Next you refuse any meaningful compromise in the now, leaving the hard decisions to your political successors. Finally you chuck money at the problem in a fiscally reckless manner designed to do nothing more than buy time.
Barring a wild modification of human and political nature this bare-boned solution is what’s going to be detailed for us Friday afternoon. The problem with merely prolonging the crisis is that ultimate success is entirely reliant on an economic recovery in Europe to enable member nations to buy things from one another even as half of the Eurozone is facing mandatory austerity measures.
In short, the idea is to give countries less and hope they buy more while somehow not incurring more debt. It’s an idea akin to he ECB becoming a Federal Reserve cover-band playing tired versions of America’s failed policies. Regardless, Wolf says it’s the Eurozone’s only hope.
All Eyes on Corzine Today; Pre Statement Reveals He Does Not Know Where the Missing Money Is
This Is What a Real Market Crash Looks Like
By Scott Cendrowski, writer-reporter
December 6, 2011: 12:50 PM ET
Investor Jeremy Grantham thinks stocks are overpriced, and he shows how long it could take the market to recover after another crash.
FORTUNE — Investing sage Jeremy Grantham sounded a little guilty in his latest report to clients, titling it “The Shortest Quarterly Letter Ever.” He should hold the apologies. Grantham, one of the pithiest market writers around, includes a chilling graphic in the four-page note that is one of the most mesmerizing market visuals of 2011.
Grantham is a value investor who oversees nearly $100 billion at his Boston-based firm, GMO. Using historical averages of prosaic data like profit margins and price-to-earning ratios, he’s made a series of prescient market calls. This spring, as U.S. stocks quickly rose, he told investors to flee the market because of escalating global fears. (He was right.) And back in 2009, he famously published a bullish note titled “Reinvesting When Terrified” at the market’s nadir.
Today he’s sounding the alarm again on stocks, and he seems as wary as ever. “Since the spring,” Grantham explains, “the equity markets have been absolutely bombarded by bad news.” Between the eurozone crisis and fears of a slowdown in China, there’s as much bad news as ever, he says. Yet the S&P 500 keeps recovering whenever crises ease for a just few days, thanks to sky-high profit margins and historically low inflation. Those two factors are driving U.S. stocks past Grantham’s estimate of the market’s fair value of 975-1,000 for the S&P 500 (SPX).
This is where his analysis starts to get scary. Profit margins will fall back to historical levels eventually, he says, and stocks will come down with them. Then there’s an inflection point. If any unresolved crises remain on the table when this happens — the eurozone crisis; a slowdown in China; budget impasses in the U.S. — then U.S. stocks could start to look a lot like those in Japan.
For two decades the Federal Reserve has bailed out stock markets, he argues. Former Fed Chairman Alan Greenspan cut interests rates to near zero percent at the slightest indication of economic decline. And today, Chairman Ben Bernanke has followed the same course, stimulating the market so drastically in 2009 that after stocks crashed they took only three months to recover to a long-term upward trend.
“This pattern is unique,” Grantham writes. And now that the Fed’s balance sheet is stuffed full with debt, he adds, it may not come to aid during another stock downturn.
“GMO has looked at the 10 biggest bubbles of the pre-2000 era and has calculated that it typically takes 14 years to recover to the old trend,” Grantham says. The important point of all this, he writes, is that almost none of today’s professional investors have experienced anything like this because the Fed has come to the rescue.
“When one of these old-fashioned but typical declines occurs,” he writes, “professional investors, conditioned by our more recent ephemeral bear markets, will have a permanent built-in expectation of an imminent recovery that will not come.”
That sets up an environment that Grantham dubs, “No Market for Young Men.” Grantham shows how long it may take U.S. stocks to recover if they crashed today:
Read the rest here.
FLASH: Apple Loses iPad Trademark Case in China
SOURCE: http://trade.cc/ois
Apple could face disruption to its iPad sales in China after a court rejected its claim to own the iPad trademark in the country and a rival sought to halt sales of the tablet device in two Chinese cities.
The developments are the latest in a long-running dispute between Apple and Proview Technology (Shenzhen), a struggling Taiwanese-owned company that registered trademarks for the name IPAD in many countries long before Apple conceived its smash hit tablet computer.
Normally, Apple is on the receiving end of intellectual property rights infringements in China, with counterfeits extending even to copies of its flagship stores. The US company has nonetheless reported soaring sales over the past three quarters, following a push started last year under which it has so far built four Apple stores in Beijing and Shanghai and 1,000 resellers across the country.
“Apple is such a Goliath and has a good image, so people wouldn’t imagine that Apple could possibly infringe on our intellectual property rights,” said Xiao Caiyuan, a lawyer for Proview at Guangdong Guanghe law firm. “People always think it’s small companies infringing upon large companies’ IPR.”
“We hope that this decision will make our negotiations with Apple a bit easier,” said Li Su, a representative of Proview.
Proview, a flatscreen contract manufacturer, made an unsuccessful attempt to sell a tablet computer in 2000, and registered trademarks for the IPAD name in the EU, China, Mexico, South Korea, Singapore, Indonesia, Thailand and Vietnam between 2000 and 2004, according to trademark databases.
In 2006, Proview Electronics (Taiwan) agreed to sell Apple the “global trademark” for the IPAD name for £35,000, according to Proview, but the two companies have subsequently disagreed about whether that deal included China.
Apple applied to have ownership of the two relevant Chinese trademarks transferred to its name before it began selling the iPad in China early last year. The Chinese trademark office rejected the application because the trademarks are owned by Proview Technology (Shenzhen), another affiliate of Proview International, the group’s Hong Kong-listed holding company, and not the Taiwan unit.
Apple then sued Proview Technology (Shenzhen), asking the court to declare the US company the rightful owner of the IPAD trademarks in China. The Shenzhen Intermediate People’s Court rejected that request earlier this week in a ruling that Apple can appeal.
At the same time, Proview Technology (Shenzhen) has sued Apple resellers in the southern Chinese cities of Shenzhen and Huizhou, seeking an immediate block on sales of iPads. The Shenzhen Futian District Court is due to start hearing one case on December 30, and the Huizhou Intermediate People’s Court has scheduled a hearing in the other for January 7.
“We are starting with these two cities, and if we are successful in getting iPad sales stopped, we will consider going after Apple resellers elsewhere in China,” said Xie Xianghui, a lawyer with Grandall, another Chinese law firm working for Proview. Apple declined to comment.
The China trademark lawsuit comes at a time when Apple is engaged in a number of patent battles globally against Samsung Electronics and HTC, two other smartphone makers. Those cases, which span markets including the US, Germany and Australia, have so far mostly been decided in favour of Apple.
Comments »Truly Disgusting: Sandusky Arrested for Two New Charges of Child Molestation
BP Gets 5 More Citations On Top of 7 “incidents of non compliance”
Germany pessimistic over success of summit
Comments »BERLIN (AP) — Germany suggested Wednesday that European leaders could fail to agree on a plan to tighten the continent’s economic ties by the end of the week, dampening investors’ optimism about a broad resolution of Europe’s debt crisis.
Instead, a senior German official said it could take until Christmas for changes to the European Union treaty to be agreed upon, a critical first step in saving the euro.
It is unclear whether the leaders have that long, as ratings agencies have warned of a possible credit downgrade of 15 European countries unless they quickly build a firm plan to solve the continent’s two-year-old debt crisis.
Markets turned lower after the German official’s comments, dampening the optimism that had seen stocks and bonds rally over the past week. Investors had been hoping that a promise of more enforceable rules on budgets would permit the European Central Bank to take bolder action to reducing borrowing costs for Italy and other struggling countries.
Germany’s main stock index fell 1.1 percent, while the Dow futures were down 0.4 percent and the euro shed 0.3 percent to $1.3358.
Merkozy conclude talks to plan talks to talk about what they’ve already talked about
Comments »PARIS (AP) — German Chancellor Angela Merkel and French President Nicolas Sarkozy have sent a letter outlining their proposals to save the euro, including punishing countries that spend too much money.
The letter sent to European Council President Herman Van Rompuy on Wednesday sums up what the leaders outlined on Monday.
It says governments that allow their deficits to exceed 3 percent of their GDP should be automatically sanctioned and asked to lay out a plan for reducing spending. It also says that countries that continue to flout spending rules will face a series of increasingly strict sanctions.
Overspending and ballooning government debt is at the heart of Europe’s crisis. Sarkozy and Merkel want their proposals to form the basis of a meeting Friday to tackle the crisis.
FLASH: Italian 10 Year Yield Breaks Above 6%
+2.5% to 6.02%
Comments »A Tax Upon Trading Garners Some Traction
FLASH: RUN ON THE GREEK BANKS
Anxious Greeks Emptying Their Bank Accounts
Georgios Provopoulos, the governor of the central bank of Greece, is a man of statistics, and they speak a clear language. “In September and October, savings and time deposits fell by a further 13 to 14 billion euros. In the first 10 days of November the decline continued on a large scale,” he recently told the economic affairs committee of the Greek parliament.
With disarming honesty, the central banker explained to the lawmakers why the Greek economy isn’t managing to recover from a recession that has gone on for three years now: “Our banking system lacks the scope to finance growth.”
He means that the outflow of funds from Greek bank accounts has been accelerating rapidly. At the start of 2010, savings and time deposits held by private households in Greece totalled €237.7 billion — by the end of 2011, they had fallen by €49 billion. Since then, the decline has been gaining momentum. Savings fell by a further €5.4 billion in September and by an estimated €8.5 billion in October — the biggest monthly outflow of funds since the start of the debt crisis in late 2009.
The raid on bank accounts stems from deep uncertainty in Greek households which culminated in early November during the political turmoil that followed the announcement by then-Prime Minister Georgios Papandreou of a referendum on the second Greek bailout package.
Papandreou withdrew the plan and stepped down following an outcry among other European leaders against the referendum, and a new government was formed on Nov. 11 under former central banker Loukas Papademos. That appears to have slowed the drop in bank savings, at least for the time being.
Bank Withdrawals Worsening Crisis
Nevertheless, the Greeks today only have €170 billion in savings — almost 30 percent less than at the start of 2010.
The hemorrhaging of bank savings has had a disastrous impact on the economy. Many companies have had to tap into their reserves during the recession because banks have become more reluctant to lend. More Greek families are now living off their savings because they have lost their jobs or have had their salaries or pensions cut.
In August, unemployment reached 18.4 percent. Many Greeks now hoard their savings in their homes because they are worried the banking system may collapse.
Those who can are trying to shift their funds abroad. The Greek central bank estimates that around a fifth of the deposits withdrawn have been moved out of the country. “There is a lot of uncertainty,” says Panagiotis Nikoloudis, president of the National Agency for Combating Money Laundering.
The banks are exploiting that insecurity. “They are asking their customers whether they wouldn’t rather invest their money in Liechtenstein, Switzerland or Germany.”
Nikoloudis has detected a further trend. At first, it was just a few people trying to withdraw large sums of money. Now it’s large numbers of people moving small sums. Ypatia K., a 55-year-old bank worker from Athens, can confirm that. “The customers, especially small savers, have recently been withdrawing sums of €3,000, €4,000 or €5,000. That was panic,” she said.
Marina S., a 74-year-old widow from Athens, said she has to be extra careful with money these days. “I have no choice but to withdraw money from my savings,” she said.
Bad Loans
The shrinking Greek bank deposits compare with bank loans totalling €253 million. Analysts say the share of bad loans could rise to 20 percent next year, or €50 billion, as a result of the recession. This in turn will worsen the already pressing liquidity problems faced by Greek banks.
Nikos B., a doctor in the Greek military, has had enough of the never-ending crisis his country is going through. While the 31-year-old has a secure job, repeated salary cuts have made it increasingly hard for him to make ends meet.
He needs most of his money to make loan repayments for a small car. “How can I clear my account? There’s hardly anything in it,” he says. He started learning German two months ago and wants to leave Greece. “As soon as possible!”
Nikos pauses and looks down. He quietly utters words that must be painful for a proud Greek. “It would be best to change nationality.”
Comments »Safety Finding on Chevy Volt Battery May Have Been Suppressed
It appears that Chevrolet and the National Highway Traffic Administration have delayed findings on safety issues for months.
Comments »EPA Posts a “Secret Watch List” of Chronic Polluters
State of the Nation: Over Half of All Adult Americans Have Little ot No Money for Their Golden Years
FLASH: S&P PLACED EFSF ON CREDIT WATCH NEGATIVE
S&P strikes again.
Comments »S&P Credit Warnings Throw a Wrench Into the Euro Solutions Engine
Shocker: Radioactive Cesium Found in Baby Formula in Japan
Breaking: *S&P SAID TO PLACE ALL 17 EURO NATIONS ON RATING DOWNGRADE WATCH
All for one, one for all.
Comments »BLOG THIS
[youtube://http://www.youtube.com/watch?v=gxbfUHAJ9E0&feature=related 450 300]
Comments »Suspending Due Process
You are now a potential terrorist if you:
[youtube://http://www.youtube.com/watch?v=pK0pEFSX7Ns 450 300] Comments »
