Page 2 of 3 CREDIT BUBBLE BULLETIN
Just the facts
Weekly watch by Doug Noland
world's largest mining company, said the combination of $40 billion in new debt
and regulatory hurdles made the $66 billion bid too risky at a time when the
slowing world economy reduced demand for raw materials."
November 25 - Bloomberg (Anthony DiPaola): "Goldman Sachs Group Inc. and Morgan
Stanley are advising Dubai as the Persian Gulf state aims to bail out its
financial services industry, the London-based Times reported ... "
Currency Watch
November 25 - Bloomberg (Ron Harui and Mike Schneider): "The
US dollar will be 'devalued' as policy makers seek to weaken it, undermining
the greenback's role as an international reserve currency, said Jim Rogers ...
'They think that if you drive down the value of your money, it makes you more
competitive, now that has never worked in history in the long term,' said
Rogers ... The dollar is 'going to lose its status as the world's reserve
currency,' Rogers said ... 'It will be devalued and it will go down a lot.
These guys in Washington, they want to debase the currency.'"
November 28 - Bloomberg (Emma O'Brien): "Russia's ruble headed for its biggest
weekly decline against the euro in at least five years as the central bank
scaled back its defense of the currency to avoid depleting foreign-cash
reserves."
The dollar index declined 1.9% to 86.52. For the week on the upside, Brazilian
real increased 7.0%, the South African rand 4.2%, the Australian dollar 3.6%,
the Swedish krona 3.3%, the British pound 3.0%, the New Zealand dollar 2.4%,
the Norwegian krone 2.3%, the Canadian dollar 2.2%, the Euro 0.8%, and the
Swiss franc 0.8%. In the so-called emerging currencies, the Russian ruble
declined 1.5%, the Argentine peso 1.2%, the Iceland krona 0.8%, and the Thai
baht 0.6%.
Commodities Watch
November 26 - Bloomberg (Subramaniam Sharma and Glen Carey): "The global oil
industry requires $6 trillion in investment to develop 64 million barrels a day
of new oil production by 2030, Abdullah Jum'ah, Saudi Aramco's president and
chief executive officer, said ... "
Gold rallied 2.4% to $819, and Silver gained 7% to $10.33. December Crude
recovered $5.15 to $55.62. December Gasoline jumped 10.7% (down 52.4% y-t-d),
while December Natural Gas slipped 0.6% (down 13.4% y-t-d). March Copper gained
4.8%. December Wheat rallied 8.3% and Corn 3.2%. The CRB index recovered 4.7%
(down 32.5% y-t-d). The Goldman Sachs Commodities Index (GSCI) rallied 7.0%
(down 35.4% y-t-d).
China Watch
November 26 - Bloomberg (Li Yanping and Nipa Piboontanasawat): "China lowered
its key lending rate by the most in 11 years, extending efforts to prevent an
economic slump less than three weeks after unveiling a 4 trillion yuan ($586
billion) stimulus plan. The key one-year lending rate will drop 108 bps to
5.58%, the People's Bank of China said ... "
November 26 - MarketNews International: "China's State Council, the cabinet,
said it will launch more policy measures to help Chinese companies overcome
their difficulties and promote economic growth. A State Council meeting on
Wednesday, chaired by Premier Wen Jiabao, also reviewed plans to reform the
pricing system for refined oil and implement a fuel tax ... 'We must stabilize
production and employment, help companies to overcome difficulties...and
maintain stable and fast economic growth,' the Cabinet statement said."
November 28 - Bloomberg (Li Yanping): "China's small businesses face a tough
winter, helped "only a little" by the government's $586 billion stimulus
package, said Li Zibin, chairman of the China Association of Small and Medium
Enterprises. 'More small and medium-sized companies will shut down as the
economy slows further,' Li said ... Businesses face a 'funding drought,' he
said. China's small and medium-sized businesses account for over 60% of gross
domestic product and 75% of urban jobs ... "
November 28 - Bloomberg (Li Yanping): "China's economy is deteriorating more
quickly as the impact of the global financial crisis spreads, underscoring the
need for 'forceful' measures to support growth, the nation's top planner said
... "
November 28 - Bloomberg (Lee J. Miller and Zhang Dingmin): "China's
foreign-exchange reserves may top $2 trillion for the first time by the end of
this year, giving the world's most-populous nation more firepower to stimulate
its economy during a global recession. China's holdings increased 25% in the
first nine months of the year ... "
November 28 - Bloomberg (Stephanie Wong and John Liu): "Shanghai, already home
to two of the world's five tallest skyscrapers, is building a tower that's even
bigger ... Groundbreaking for the 632 meter (2,074 feet) tall Shanghai Tower
will take place tomorrow, with completion of what will likely be the world's
second-tallest skyscraper scheduled for 2014. The building, which will cost
about 14.8 billion yuan ($2.2 billion), will stand above and across the street
from the Shanghai World Financial Center and the Jin Mao Tower, both of which
are currently among the world's five tallest."
November 28 - Bloomberg (Kelvin Wong): "Hong Kong's luxury home prices, which
more than doubled between 2003 and last year, have fallen 17.7% since June as
the stock-market slump damps buyer sentiment, a property agency said."
Japan Watch
November 28 - The Wall Street Journal (Toru Fujioka and Jason Clenfield):
"Japan's recession deepened last month as companies cut production, consumers
spent less and fewer people looked for work. Factory output fell 3.1% from
September ... Houssehold spending slid 3.8%, the eighth consecutive drop.
Companies surveyed said they plan the sharpest production cuts in 35 years ...
"
November 28 - Bloomberg (Taku Kato): "Morimoto Co., a property developer, filed
for protection from creditors with 162 billion yen ($1.7 billion) of debt,
bringing the number of bankruptcies among publicly traded companies in Japan to
a postwar record."
November 28 - Bloomberg (Mari Murayama): "Japan's Government Pension Investment
Fund reported a market investment loss of 4.24 trillion yen ($44.5 billion) for
the three months ended Sept. 30, more than double the loss a year earlier ... "
Latin America Watch
November 26 - Bloomberg (Andre Soliani and Camila Fontana): "Brazil's annual
inflation rate accelerated to the highest in more than three years this month
on food costs, topping the upper limit of the central bank's target band.
Consumer prices ... rose 6.54%..."
November 25 - Bloomberg (Carlos Caminada): "Coffee farmer Joao Carlos Terra
says his trees will yield about a third less than planned next year because he
can't get a big enough loan to buy fertilizer and pesticide as the global
credit crunch bites in Brazil ... 'It's kind of impossible to keep going like
this,' said Terra ... who grows arabica coffee on about ... 25 acres ... I
don't know what will happen.'"
Unbalanced Global Economy Watch
November 26 - Bloomberg (Svenja O'Donnell): "U.K. consumer spending dropped the
most since 1995 and investment fell in the third quarter as the economy slid
into a recession, crippled by the financial crisis. Gross domestic product
dropped 0.5% from the second quarter ... "
November 26 - DPA: "The Woolworths retail chain in Britain, which has had a
presence on the High Street for nearly 100 years, is to file for
administration, company sources said ... The collapse of the retail empire,
which employs more than 25,000 staff in 815 outlets across Britain, came after
last-minute efforts to save the company failed Wednesday, the BBC reported."
November 28 - The Wall Street Journal (Fergal O'Brien): "European confidence in
the economic outlook fell to a 15-year low this month even after radical
interest-rate cuts and government stimulus measures aimed at battling the
impact of the financial crisis."
November 24 - Bloomberg (Gabi Thesing): "German business confidence slumped to
the lowest level in almost 16 years in November as the global financial crisis
sapped demand for exports."
November 28 - Bloomberg (Zoltan Simon): "Hungarian producer-price growth ...
accelerated in October by the most in more than two years ... The cost of goods
leaving factories and mines rose 7.8% in the year ... "
November 26 - Bloomberg (Helga Kristin Einarsdottir): "Iceland's inflation rate
jumped to 17.1% in November, the highest since 1990, after the failure of the
country's banking system led to the collapse of the krona ... 'Historically the
currency fluctuations have had a significant impact on inflation, so in the
near term the prospects for inflation are not promising,' said Henrik Gullberg,
a currency strategist at Deutsche Bank ... "
Bursting Bubble Economy Watch
November 26 - Washington Post (Jane Black): "Fueled by rising unemployment and
food prices, the number of Americans on food stamps is poised to exceed 30
million for the first time this month, surpassing the historic high set in 2005
after Hurricane Katrina ... 'We soon will have the most food stamps recipients
in the history of our country,' said Jim Weill, president of the Food Research
and Action Center ... "
November 26 - Bloomberg (Shobhana Chandra): "Spending by US consumers dropped
in October by the most since the 2001 contraction, signaling the economy is
sinking into a deeper recession. The 1% decline in purchases followed a 0.3%
drop in September ... A separate report from Commerce showed business
investment also tumbled last month. The biggest consumer spending slump in
three decades is likely to persist as home prices fall and job losses mount ...
"
November 24 - Dow Jones: " National retail sales continued to slow in the first
half of November, furthering a trend started in September, according to
MasterCard Advisors LLC's SpendingPulse ... The professional services arm of
MasterCard Worldwide said eCommerce showed the most modest declines, falling
7.5% from the year-earlier period."
November 26 - Bloomberg (Timothy R. Homan): "A measure of US business activity
contracted in November at the fastest pace since April 1982 ... The Institute
for Supply Management-Chicago said today its business index decreased to 33.8
this month ... "
November 26 - Bloomberg (Shobhana Chandra): "New-home sales in the US fell in
October to the lowest level in 17 years as the
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