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The Economist (October 14)

2010/ 10/ 15 by jd in Global News

American states like California are facing crippling budget deficits. As if things aren’t bad enough, the Economist points to a massive $3 trillion hole: public-sector pensions. States have been underfunding pensions to police, fire fighters and other civil servants. Overly generous benefits and an unrealistic assumption of 8% asset growth have contributed to the staggering pension shortfall. “American states have promised their employees benefits they can’t afford.”

 

Institutional Investor (October Issue)

2010/ 10/ 14 by jd in Global News

Modern economic warfare appears to center on competitive depreciation. The euro, the dollar, the yuan, the yen and other currencies are competing for lower ground as a means to jumpstart their own national economies. Institutional Investor points out “competitive devaluations and/or depreciations can cause the world to slip back into recession…. We need statesmen and stateswomen, not nationalists.”

 

Financial Times (October 10)

2010/ 10/ 13 by jd in Global News

When China disrupted exports of rare earths, prices of some shot six times higher. With just 36% of global rare-earth deposits, China accounts for an outsized 97% of production. China’s “stranglehold on supply” is dangerous for other countries. “Creative thinking is required if China is not to become the OPEC of rare earths.”

 

Wall Street Journal (October 9)

2010/ 10/ 12 by jd in Global News

Bank of America, J.P. Morgan Chase and other U.S. lenders have called a halt on foreclosures as they determine whether legal requirements were met on previous foreclosures. Paperwork for foreclosures in 23 states may lack the required signature of an individual who personally reviewed all the relevant mortgage documents. The Wall Street Journal believes the moratorium is damaging “to the housing market, which desperately needs to find a bottom by clearing excess inventory and working through foreclosures as rapidly as possible.”

 

New York Times (October 9)

2010/ 10/ 11 by jd in Global News

The Nobel Peace Prize was awarded to Liu Xiaobo, despite pressure from Beijing. Liu, a democracy activist, is currently under arrest and the Chinese government is upset by his selection. The New York Times supports the Nobel Committee for standing up to Beijing. “Beijing is used to throwing its weight around these days—on currency, trade, the South China Sea and many other issues…. Maybe someone in China’s leadership will now figure out that bullying is not a strategy for an aspiring world power.”

 

Boston Globe (October 8)

2010/ 10/ 09 by jd in Global News

The Globe points to “a distressing pattern for executive pay.” It always goes up. “In the economic-meltdown year of 2009, CEO salaries at publicly traded companies based in Massachusetts rose by a cushy 8 percent, even as many of the companies suffered disappointing returns.” In the future, the CEOs will ask for another raise when profits improve. Executive pay has become detached from executive performance. The Globe calls on shareholders to exercise their say-on-pay votes to correct the situation.

 

Economist (October 7)

2010/ 10/ 08 by jd in Global News

The International Monetary Fund’s latest forecast indicates global GDP expansion of 4.8%. The Economist points out averages are misleading. Emerging countries are racing along at rates closer to 10% while richer countries struggle with sluggish growth. For this reason, the Economist warns, “Emerging economies need to allow their currencies to rise more. The rich should tread carefully with fiscal consolidation: sensible budget repairs should be less about short-term deficit-slashing and more about lasting fiscal reforms, from raising pension ages to trimming health-care costs.”

 

The Independent (October 7)

2010/ 10/ 08 by jd in Global News

One of the largest environmental disasters to strike Europe in recent decades now threatens the scenic Danube River. 35 million cubic feet of toxic sludge poured into tributaries of the Danube from an alumina plant in Hungary. Officials are racing to halt the contamination before it reaches the Danube. It is too early to tell whether they will succeed in stopping the flow of the red muddy industrial waste, which contains heavy metals such as arsenic and mercury.

 

BBC (October 6)

2010/ 10/ 07 by jd in Global News

French rogue trader Jerome Kerviel was sentenced to 3 years in prison and ordered to repay €4.9 billion ($7 billion), the loss he inflicted on employer Societe Generale. Without approval, Kerviel risked €50 billion of SocGen’s money. The BBC reports the impossibility of repayment. “On the basis of his current earnings, Kerviel would need about 180,000 years to reimburse to Societe Generale in full.” SocGen’s spokesman agreed. “There is no question of demanding such sums from one single man.” The Bank is searching for an alternative.

 

Financial Times (October 4)

2010/ 10/ 05 by jd in Global News

The Securities and Exchange Commission (SEC) released its findings on the May 6 Flash Crash when the Dow Jones Industrial Average dropped 1,000 points before bouncing back…all in a breathtaking 20 minutes. The cause was an institutional investor’s $4.1 billion sale of so-called “e-mini” futures contracts to hedge against an equity position. The trade appears to have been legitimate. The SEC must take action to ensure legitimate trades don’t result in excess volatility that scares investors away from stock markets. Measures should include circuit breakers and regulation of high-frequency traders, including requirements that they serve as market makers.

 

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