Countries & Regions Archives - Page 237 of 374

December 3, 2012

Fiscal Cliff Is Just a Speed Bump on the Road to a Real Crisis | International Liberty

Dan Mitchell writes in the New York Post:

A lot of people get upset about the national debt, which is somewhere between $11 trillion and $16 trillion, depending on whether you include money the government owes itself. Those are big numbers — but if you add up the amount of money that the government is promising to spend for entitlement programs in the future and compare that figure to the amount of revenue that the government projects it will collect for those programs, the cumulative shortfall is more than $100 trillion. And that’s after adjusting for inflation. Some politicians claim this huge, baked-into-the-cake expansion of government isn’t a problem, because we can raise taxes. But that’s exactly what Europe’s welfare states tried — and it didn’t work. Simply stated, even huge tax hikes won’t stem the flow of red ink in the long run if government keeps growing faster than the private economy. This is the fiscal problem that demands attention. Absent real entitlement reform, such as block-granting Medicaid to the states, the burden of government spending will consume ever-larger shares of our economic output with each passing year.

via Explaining in the New York Post that the Fiscal Cliff Is Just a Speed Bump on the Road to a Real Crisis « International Liberty.

Colin Twiggs

Colin Twiggs is a former investment banker with almost 40 years of experience in financial markets. He co-founded Incredible Charts and writes the popular Trading Diary and Patient Investor newsletters.

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

Focusing on interest rates and financial market liquidity as primary drivers of the economic cycle, he warned of the 2008/2009 and 2020 bear markets well ahead of actual events.
He founded PVT Capital (AFSL No. 546090) in May 2023, which offers investment strategy and advice to wholesale clients.

December 3, 2012

China: Uncertain foundations – FT.com

Simon Rabinovitch at FT writes:

Shadow banking is flourishing in China, helping to make non-bank institutions as big a source of credit as banks themselves since July – something that has never happened before. Chinese bankers, leading rating agencies and the International Monetary Fund have all warned about risks from the surge in loosely regulated lending, with some even pointing to parallels with developed economies before the global financial crisis. But the Chinese government itself has taken a permissive stance.

Highly regulated banks restricted lending to property developers following concerns over a real estate bubble. But regulators turned a blind eye to unregulated shadow lenders who borrow short — normally no more than 3 months — and lend long. They may believe this will sustain economic growth while protecting banks from risky lending. The thinly capitalized sector, however, is at risk from defaults and a consequent liquidity crisis which could spread to the banking sector.

via Uncertain foundations – FT.com.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 2, 2012

IMF: Australia's banks need more capital

The IMF identifies risks to Australia’s banking system:

Residential mortgages are banks’ single largest asset, and a combination of high household debt and elevated house prices increases the risk in this portfolio.

Banks rely on funding from outside the country, and with the crisis in Europe and the global economy suffering, these funding sources are volatile.

Four major banks dominate the banking system, and they share many similarities that can be a cause of risk spreading from one to another in the event of a crisis.

……The four major banks are systemically important which means difficulties in any one of them would have severe repercussions for the financial system and the economy. A higher minimum capital requirement would provide a bigger cushion against potential losses.

Capital ratios may under-state capital requirements through risk-weighting assets. Past performance is not always a good predictor of the future. I prefer FDIC director Thomas Hoenig’s unweighted comparison of tangible assets to tangible equity.

via IMF Survey: Australia’s Banks Sturdy, Closely Connected.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 2, 2012

Even without U.S. cliff, world economy teeters | Reuters

Pedro Nicolaci da Costa at Reuters writes:

In the United States, the economy faces growing challenges even without the ongoing political wrangling…….

The coming week brings a slew of reports expected to show the U.S. economy struggling. Data on Friday will likely show employment growth slowed to just 100,000 jobs last month from 171,000 in October, according to a Reuters poll of economists.

U.S. manufacturing data this week is also likely to suggest a fourth-quarter slowdown is at hand.

via Even without U.S. cliff, world economy teeters | Reuters.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

December 2, 2012

Why is Australia paying Japanese prices for natural gas?

Australian-born chairman and CEO of the Dow Chemical Company, Andrew Liveris, talks with Alan Kohler on ABC Inside Business about the US fiscal cliff and why Australia needs a cohesive energy policy.

“We have to create an infrastructure such that we can have gas-on-gas on competition domestically. If you build the infrastructure, and private sector can do it, and allow shared pipelines, if you build it you will get a domestic gas system and a pricing system that defies the oil gas parity pricing that countries like Australia should never have. If you have the resource in your country, you shouldn’t be paying the highest alternative price of the country that doesn’t have the resource. Why are we paying Japan energy prices when we have domestic gases?”

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 28, 2012

Euro recovers

The Euro is testing its long-term descending trendline in response to the weakening dollar. Breakout above $1.315/$1.32 would confirm the primary up-trend signaled earlier by 63-day Twiggs Momentum recovery above zero.

Euro/USD

* Target calculation: 1.315 + ( 1.315 – 1.265 ) = 1.365

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 28, 2012

Aussie Dollar tests $1.05

The Aussie Dollar found short-term support at $1.04 and is testing medium-term resistance at $1.05. Breakout would indicate a test of long-term resistance at $1.06. Oscillation of 63-day Twiggs Momentum above zero suggests a primary up-trend. In the long-term, breakout above $1.06 would offer a target of $1.10* but the RBA is likely to take measures to counter further appreciation.

Aussie Dollar/USD

* Target calculation: 1.06 + ( 1.06 – 1.02 ) = 1.10

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 28, 2012

The eurozone’s double-dip recession is entirely self-made. | EUROPP

Good comparison of relative unit labor costs for EZ countries in this article by Paul De Grauwe. Germany is lowest at 85-90. Greece and Portugal highest at 110-115, with Italy, Spain and Belgium next at 105-110. Ireland has made the most spectacular recovery, falling to 95 from a high 115-120 in 2007.

The position of Germany stands out. During 1999-2007, Germany engineered a significant internal devaluation that contributed to its economic recovery and the build-up of external surpluses.

via The eurozone’s double-dip recession is entirely self-made. | EUROPP.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 28, 2012

The Numbers Racket at Steven Landsburg | The Big Questions

Steve Landsberg points out the flaw in the often-quoted statistic that the median US worker has enjoyed hardly any income gain over the past few decades, with median wages growing from $25,000 in 1980 to $25,700 in 2005:

Each demographic group has progressed, but at the same time, there’s been a great influx of lower income groups — women and nonwhites — into the workforce. This creates the illusion that nobody’s progressing when in fact everybody’s progressing.

Actual growth rates are as high as 75% for white women and 62% for nonwhite women.

via The Numbers Racket at Steven Landsburg | The Big Questions: Tackling the Problems of Philosophy with Ideas from Mathematics, Economics, and Physics.

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.

November 28, 2012

Australia: ASX 200 resistance

The ASX 200 encountered resistance at the descending trendline — around 4450. A sharp rise in 21-day Twiggs Money Flow indicates short-term buying pressure. Breakout would indicate a primary advance to 4750*. Retreat below 4400 is less likely but would suggest a decline to 4250.

ASX 200 Index

* Target calculation: 4550 + ( 4550 – 4350 ) = 4750

Colin Twiggs

Using a top-down approach, Colin identifies key macro trends in the global economy before evaluating selected opportunities using a combination of fundamental and technical analysis.