The MasterFeeds: January 2011

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January 27, 2011

A toxic mix of greed, mistakes and recklessness

From The International Herald Tribune:

"By one measure, for about every $40 in assets, the five largest U.S. investment banks had only $1 in capital to cover losses, meaning that a 3 percent drop in asset values could have wiped out the firms."



A toxic mix of greed, mistakes and recklessness

WASHINGTON — The 2008 financial crisis was an ''avoidable'' disaster caused by widespread failures in regulation, corporate mismanagement and heedless risk-taking by Wall Street, according to the conclusions of a U.S. government inquiry.

The commission that investigated the crisis casts a wide net of blame, faulting two U.S. presidential administrations, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

''The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,'' the panel wrote in the report's conclusions, which were read by The New York Times, of which the International Herald Tribune is the global edition. ''If we accept this notion, it will happen again.''

While the panel, the Financial Crisis Inquiry Commission, accuses several financial institutions of greed, ineptitude or both, some of its gravest conclusions concern government failings, with embarrassing implications for both parties. But the panel was itself divided along partisan lines, which could blunt the effect of its findings.

Many of the conclusions have been widely described, but the synthesis of interviews, documents and testimony, along with its government imprimatur, give the report, which will be released Thursday as a 576-page book, a conclusive sweep and authority.



http://www.nytimes.com/2011/01/26/business/economy/26inquiry.html


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January 25, 2011

Treasury Prices Edge up After Fed Buys $8.9B Bonds - ABC News

Treasury prices Monday inched higher after the Federal Reserve bought close to $9 billion in bonds.

The price of the 10-year Treasury note edged up 12.5 cents. Its yield, which moves in the opposite direction, edged down to 3.39 percent from 3.40 percent late Friday.

The Fed bought $8.9 billion in five- and six-year notes. The central bank also bought $8 billion worth of bonds on Friday. The purchases are part of the Fed's $600 billion bond-buying program which was launched in November to keep interest rates low and encourage lending.

Treasurys have been in a relatively narrow range since the start of new year. Yields had spiked in the last two months of 2010 on expectations of faster economic growth.

Bond strategist at IDEAGlobal Josh Stiles said the Treasury market has been caught between two forces.

"On the one hand the Fed has an extremely easy policy of cheap financing, which prevents much of a sell-off," said Stiles. "But the economy is getting stronger, so the question is how much longer can the Fed keep the rates so low and that's kept the bulls from buying."

Traders tend to invest in low-risk Treasurys when the economy seems weak. Investors have been shifting money out of Treasurys and into stocks since late November.

In other trading, the price of the 30-year note rose 15.6 cents per $100 invested, keeping its yield flat at 4.56 percent from late Friday. The yield on the two-year Treasury note was up slightly to 0.62 percent from 0.61 percent.

The yield on the three-month Treasury bill was unchanged at 0.15 percent. Its discount was 0.16 percent.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.



Treasury Prices Edge up After Fed Buys $8.9B Bonds - ABC News

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January 18, 2011

Financial Times: China’s lending hits new heights

January 17 2011 10:15 PM GMT
China's lending hits new heights
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By Geoff Dyer and Jamil Anderlini in Beijing and Henny Sender in Hong Kong
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The volume of overseas loans by two banks indicates how Beijing is forging new patterns of globalisation, as part of a push to scale back dependency on western export markets

Read the full article at: http://www.ft.com/cms/s/0/488c60f4-2281-11e0-b6a2-00144feab49a.html?ftcamp=rss



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Facebook blow for Goldman US clients

Facebook blow for Goldman US clients

http://ftalphaville.ft.com/thecut/2011/01/18/461276/facebook-blow-for-goldman-us-clients/

Goldman Sachs has scrapped an offer to clients in the US to participate in a $1.5bn investment in Facebook, dealing a blow to one of the most closely watched private financings for a US company, reports the FT. The offer will still be open to investors elsewhere but the bank said publicity over the plan threatened to put it in breach of US securities laws against the promotion of private share sales. Demand for shares in Facebook, which is considering a full initial public offering in early 2012, has soared in private markets in recent months, making Goldman’s ability to offer favoured clients the stock a coup for the bank. DealBook notes that problems with the offering may fuel recent tensions between Goldman and Facebook, and could damage the firm’s prospects of leading Facebook’s long-awaited IPO. DealJournal posts Goldman’s “sorry about that” statement.

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China: Export-Import Bank Lends More Than World Bank

China: Export-Import Bank Lends More Than World Bank

January 17, 2011

China has lent more money to developing nations over the past two years than the World Bank, totaling at least $110 billion, according to Financial Times, Jan. 18. The World Bank, by contrast, lent $100.3 billion between mid-2008 and mid-2010.




China Needs To Radically Change Its Broken Growth Model

Nouriel Roubini Blog: China Needs To Radically Change Its Broken Growth Model.

"Clearly China needs to radically change its broken growth model in the direction of reduced exports, investment and savings, and increased consumption. But there are structural—and cultural—reasons why the Chinese save so much and consume so little. Radical policy reforms may take more than a generation to rebalance the Chinese economy toward a more sustainable growth model." - in www.newsweek.com

Nouriel Roubini Blog: China Needs To Radically Change Its Broken Growth Model.

January 17, 2011

Financial Times: Agriculture - can it be a cash cow for investors?

January 16 2011 11:56 AM GMT
Agriculture - can it be a cash cow for investors?
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By Ellen Kelleher
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Investing in land to gain from rising food prices is increasing – despite the risks – some even believe it makes more sense than taking out commodities futures

Read the full article at: http://www.ft.com/cms/s/0/d5ecf8e4-2012-11e0-a6fb-00144feab49a.html



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FT.com / China - Renminbi rolls out

Renminbi rolls out

Published: January 16 2011 19:33 | Last updated: January 16 2011 19:33
It is not yet a flood, but the trickles eroding the walls that keep China’s currency within the country’s territory are beginning to add up to something.
Already last year, the renminbi debuted as a currency for bond financing by multinational corporations (McDonald’s); trade credits (to an Indonesian group by the Industrial and Commercial Bank of China); and offshore deposit accounts (to the Bank of China’s personal banking clients in London, New York and other cities).
Last week, further holes were pierced in the dam of non-convertibility. Pharo Management, a hedge fund manager, announced it will offer renminbi-denominated shares in its funds. The city of Wenzhou launched a pilot project to lighten restrictions on its residents’ ability to invest money offshore. And a year and a half after Chinese corporations were allowed to settle cross-border trades in their own currency, permission has also been granted to use renminbi to acquire or found new operations overseas.
That many of these moves make it easier to ship renminbi out of the country does not change the redback’s natural and favoured direction. If Chinese authorities were relaxing restrictions on capital inflows as freely as on outflows, the renminbi would have appreciated by more than the 3.5 per cent it has risen against the dollar since last year.

Read more on FT.com / China - Renminbi rolls out


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January 15, 2011

Financial Times: Tunisian president swept from power

January 14 2011 10:12 PM GMT
Tunisian president swept from power
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By Roula Khalaf in London and Heba Saleh in Tunis
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A month-long wave of violent protests has swept Tunisia's president from power, bringing an extraordinary end to the 23-year rule of one of the Arab world's most autocratic leaders
Read the full article at: http://www.ft.com/cms/s/0/8c07e0a4-1eff-11e0-b3ba-00144feab49a.html?ftcamp=rss


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January 12, 2011

Financial Times: Airbus seals $15.6bn India deal for 180 aircraft

January 11 2011 11:44 PM GMT
Airbus seals $15.6bn India deal for 180 aircraft
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By Pilita Clark in London
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European jet maker has won what it describes as a record deal to sell 180 aircraft to the Indian budget airline IndiGo

Read the full article at: http://www.ft.com/cms/s/0/268f85d4-1ddc-11e0-badd-00144feab49a.html?ftcamp=rss



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