Thursday, 3 December 2009

Associated Press: Isolationism soars among Americans,

WASHINGTON - Americans are turning away from the world, showing a tendency toward isolationism in foreign affairs that has risen to the highest level in four decades, a poll out Thursday found.

Almost half, 49 percent, told the polling organization that the United States should "mind its own business" internationally and let other countries get along the best they can on their own, the Pew Research Center survey found. That's up from 30 percent who said that in December 2002.

UK Telegraph: Benign neglect may turn the dollar from a safe haven to a dangerous place to be

The trade deficit of the world's biggest economy also remains huge. How much longer can the dollar defy gravity?

Last week, America's currency fell to a 15-month low against the euro, cutting through $1.5050. Against a trade-weighted currency basket, the dollar was also at its weakest since July 2008. The greenback plunged to parity with the rock-solid Swiss franc, then hit a 14-year low against the yen.

The dollar's weakness is based on fundamentals – not least America's jaw-dropping debt. It's a long-term trend. From the start of 2002 until the middle of last year, the dollar lost 30pc on a trade-weighted basis.

FT: States need to permanently change their budgets

States need to consider permanent budgetary changes to close ballooning deficits or risk “significant cracks” in the municipal bond market, the lieutenant governor of New York said on Monday.

Richard Ravitch said New York and other states had historically relied on temporary measures to balance budgets in downturns as a bridge to recovery, a strategy that was unsustainable.

FT: Fears grow about overheated US debt market

Some of the most controversial financing practices of the credit-bubble years – from cov lite loans to Pik toggle notes and dividend recap exercises – have returned to Wall Street, stoking fears that debt markets are growing overheated.

The techniques fell into disrepute during the financial crisis because they were based to varying degrees on the same rosy expectations that encouraged companies and consumers to assume what proved to be crippling levels of debt.

Furious investors warn troubled Dubai it will 'never raise a penny again'

Furious bondholders have arranged emergency talks with Dubai officials this week in an effort to get some clarity on the financial health of the state-owned company Dubai World, which caused widespread panic on world markets last week when it asked creditors for a six-month standstill on debt repayments.

A conference call has been organised by the New York-based hedge fund QVT Financial, after an attempt last week was abandoned when the telephone system collapsed under the weight of calls.

Investors are angry that the announcement was made at the start of the Islamic Eid and US Thanksgiving holidays, leaving them in the dark for days. "They won't be able to raise a penny again from the international investment community," one hedge fund manager said.

What Recovery? U.S. Consumers Getting "Dramatically Worse," Howard Davidowitz Says "The consumer is in worse shape since I was here last" in August, Davidowitz says, citing the following:

• Unemployment has exploded: "We've lost a ton of jobs since I was here last," Davidowitz says, noting the "real" unemployment rate is 17.5%. "That's an astounding number."
• Housing continues to sink: "The consumers' biggest asset is down trillions" in value while "foreclosures are exploding" and a huge percentage have negative equity -- 23% according to CoreLogic.
• Record numbers of consumer bankruptcies: The American consumer has "never been further behind...never defaulted more" on mortgages, student loans, auto loans, and credit card bills, he says.
• Poverty on the Rise: One in eight Americans and one in four children are receiving food stamps, as The NYT reported this weekend.