CIC Stops Buying Europe Government Debt on Crisis Concern
By Andres R. Martinez
May 10 (Bloomberg) — Gao Xiqing, president of China Investment Corp., said the nation’s sovereign wealth fund has stopped buying European government debt on concerns about the region’s financial turmoil.
CIC will continue to look for new investments in Europe as part of its strategy to boost allocations to infrastructure, private-equity assets as well as emerging markets to help boost returns, Gao said. CIC, with an estimated $440 billion in assets, is the world’s fifth-largest country fund, according to Sovereign Wealth Fund Institute.
“What is happening in Europe right now is of course of concern,” Gao said in an interview in Addis Ababa, Ethiopia, during the World Economic Forum on Africa. “We still have our people looking at opportunities in Europe, even though we don’t want to buy any government bonds.”
Europe’s turmoil is reigniting on the second anniversary of policy makers’ first attempt to prevent Greece’s woes from spreading. That raises fresh doubt over the strategy just as Greece’s election spurs concern that the country may not meet the terms of its international rescues and will seek a solution outside the euro.
Monthly Archives: May 2012
Another nice write up on CNBC.com
Is Norway Preparing for a European Bond Disaster?
By John Carney
61% Believe Europe Needs to Cut Government Spending to Save Economy
In case you thought US voters were any different than their euro counterparts:
61% Believe Europe Needs to Cut Government Spending to Save Economy
May 9 (Bloomberg) — Newly elected leaders in France and Greece have signaled that austerity efforts in their countries may be coming to an end, but as far as Americans are concerned, that’s a move in the wrong direction. A new Rasmussen Reports national telephone survey finds that 61% of American Adults believe cuts in government spending would do more to improve the economic and financial situation in France and Greece than increases in that spending. Just 20% think more government spending is the better way to go. Eighteen percent (18%) are not sure. (To see survey question wording, click here.)
The survey of 1,000 Americans nationwide was conducted on May 7-8, 2012 by Rasmussen Reports. The margin of sampling error is +/- 3 percentage points with a 95% level of confidence. Field work for all Rasmussen Reports surveys is conducted by Pulse Opinion Research, LLC. See methodology.
Fannie Mae Won’t Seek Aid After Reporting $2.7 Billion Profit
FNMA may have always had only a market to market issue and not a long term cash flow issue.
And its always been a public/private partnership with govt’s role that of the funding model, so I never saw govt funding as a ‘bailout’
The public purpose of FNMA is to get lower income earners in their own homes, which it has successfully done for maybe 50 years for millions of American owners and their families.
The ‘real’ cost of the program is the alternative use of the actual goods and services devoted to this mission.
(Just me, but seems like it’s been a net gain.)
Note that banking is a public private partnership as well, with govt providing the funding, directly or indirectly, and private capital pricing the risk. So for me, govt provided liquidity for banking isn’t a ‘bailout’ but a necessary and continuous condition, all presumably serving public purpose.
Fannie Mae Won’t Seek Aid After Reporting $2.7 Billion Profit
By Clea Benson
May 9 (Bloomberg) — Fannie Mae, the biggest backer of U.S. home loans, said it won’t seek Treasury Department aid after reporting net income of $2.7 billion for the first quarter.
The Washington-based company, which has operated under U.S. conservatorship since it was seized in September 2008, cited lower credit-related expenses, a decline in serious delinquency rates and a drop in its inventory of owned properties as contributors to the improvement, according to a statement released today. The company has drawn a total of $117.1 billion in aid while under government control.
The first-quarter profit reflected a “less significant decline in home prices,” the company said in a Securities and Exchange Commission filing.
EU’s Response to Crisis Will ‘Convince People,’ Van Rompuy Says
See below, seems 75% still support the euro vs trusting their own leaders with their own currency.
Also, unfortunately, the non MMT world pretty much still fails to grasp that mass unemployment is a macro problem and a manifestation of unspent income. That the only way the output gap gets filled is by some sector spending more than its income; and that the issuer of the currency is the only entity that isn’t inherently revenue constrained when it spends.
EU’s Response to Crisis Will ‘Convince People,’ Van Rompuy Says
May 9 (Bloomberg) — European Union President Herman Van Rompuy said the EU’s response to the sovereign-debt crisis will “convince people” of the value of being in the 27-nation bloc.
“We will convince people of the sense and the meaning of EU membership by results,” Van Rompuy said in a question-and- answer session posted on the Euronews website today. “That’s why we have to stabilize the euro zone and that’s why we have to increase economic growth and create jobs.”
“There is still a huge majority in most of the countries for membership of the European Union and the euro zone,” Van Rompuy said. “Even in Greece, I saw an opinion poll just before the election which said that 75 percent of people don’t want to leave the euro zone.”
Student loans dominate consumer credit
Student Loans Continue to Drive Consumer Credit in March 2012
By Steven Hansen
Norway protesting PSI losses
>
> (email exchange)
>
> On Tue, May 8, 2012 at 10:21 AM, John wrote:
>
> Norway’s oil sovereign wealth fund has sold all its holdings of Irish and Portuguese
> government debt and reduced its ownership of Spanish and Italian bonds as part of a
> continuing protest over its forced participation in Greece’s debt restructuring. The
> fund also reduced its Italian sovereign debt position from about EUR 8bn in the middle
> of 2011 to about EUR 3.5bn at the end of March this year.
>
PSI/Bond tax- the 800 lb gorilla?
Greece did it, and sanctioned by the EU. They cut their deficit by 100 billion euro by decree, by what was called ‘private sector involvement’ which was, functionally, a bond tax.
Instead of another 100 billion of public sector service cuts and tax hikes on the population, they just taxed the holders of Greek bonds. And ostensibly nothing ‘bad’ happened, apart from a few banks changing a few numbers down on their books. Nor did the euro go down or inflation go up or anything else ‘monetary’ go wrong.
Pretty tempting for a new socialist govt in any euro member nation?
No more austerity, just a bond tax instead?
If Greece doesn’t have to pay, why do we?
But, so far, not a word from any of them.
The silence is deafening.
The risk very real.
Oil a ‘Little Bit High,’ Saudi Arabia’s Al-Naimi Says
As swing producer/price setter, they call the tune. But what they say publicly isn’t always what they do privately. I had thought they may be holding Brent at 120 and letting WTI converge to it as the new pipeline scheduled to begin May 15 worked to equalize prices. But it’s certainly possible they could converge at a lower price, if the Saudis so choose.
Oil a ‘Little Bit High,’ Saudi Arabia’s Al-Naimi Says
By Jacob Adelman and Yuji Okada
May 8 (Bloomberg) — Saudi Arabia is storing as much as 80 million barrels of crude to boost supplies amid international prices that are “still a little bit high,” according to the country’s oil minister Ali al-Naimi.
The nation, the world’s largest oil exporter, has set aside supplies “on shore in Saudi Arabia, in pipelines, in tanks,” al-Naimi said in Tokyo today before board meetings of state- owned Saudi Arabian Oil Co., of which he is chairman.