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    Daily Digest 1/10 – Record High for World Food Prices, European Debt Worries, High Prices for Gold

    by DailyDigest

    Monday, January 10, 2011, 4:00 PM

  • Debt Default Fears will Spread to US and Japan, Warns Citigroup’s Willem Buiter
  • World Food Prices Enter ‘Danger Territory’ To Reach Record High
  • Rumour of €80bn Bail-Out To Squeeze Portugese Bonds
  • Deepening Crisis Traps America’s Have-Nots
  • Massive Silver Withdrawals From The Comex
  • European Debt Worries Again Weigh on Shares
  • Gold Rises A Bit But High Prices Limit Buying

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Economy

Debt Default Fears will Spread to US and Japan, Warns Citigroup’s Willem Buiter (dejan)



There are likely to be several sovereign debt restructurings in the next few years, the analysts said, with Portugal likely to need to access the emergency funding facilities soon. Against this backdrop, the US and Japan – dubbed the “fiscal sustainability deniers” – cannot keep ignoring the question of how safe their public finances are, the team said.

World Food Prices Enter ‘Danger Territory’ To Reach Record High (dejan)



Sugar and meat prices are at record levels, while cereal prices are back at the levels last seen in 2008, when riots in Haiti killed four people and riots in Cameroon left 40 dead. Abbassian warned prices could rise higher still, amid fears of droughts in Argentina and floods in Australia and cold weather killing plants in the northern hemisphere.

Rumour of €80bn Bail-Out To Squeeze Portugese Bonds (pinecarr)



Mr Cavaco Silva told Portugal’s Público newspaper that he was “surprised” a German magazine is publishing news of such importance to a European Union member state without the issue being discussed by the EU authorities. Still, Portugal’s finances appear to be coming under fresh scrutiny over whether it will have to take financial help from the EU and the IMF.

Deepening Crisis Traps America’s Have-Nots (pinecarr)



Cartier and Louis Vuitton have helped boost the luxury goods stock index by almost 50pc since October. Yet Best Buy, Target, and Walmart have languished. Such is the blighted fruit of Federal Reserve policy. The Fed no longer even denies that the purpose of its latest blast of bond purchases, or QE2, is to drive up Wall Street, perhaps because it has so signally failed to achieve its other purpose of driving down borrowing costs. Yet surely Ben Bernanke’s `trickle down’ strategy risks corroding America’s ethic of solidarity long before it does much to help America’s poor.

Massive Silver Withdrawals From The Comex (pinecarr)



We witnessed a massive withdrawal of silver unprecedented in the history of the comex. First there was a smallish 6507 oz of silver deposited to two customers, one being 497 oz and the other 6010 oz). But just look at the huge withdrawals: Four customers (not dealers) withdrew a total of 1,019,310 oz from the comex vaults. This is real silver leaving from 4 registered vaults. The individual withdrawals are: 579,081, 30,380, 399,994 and 9855 oz.

European Debt Worries Again Weigh on Shares



Traders also took in another round of mergers and acquisition, including Duke Energy’s $13.7 billion acquisition of Progress Energy, a tie-up that will create the country’s largest utility, and DuPont’s agreement to buy Danisco, a Danish specialty food ingredients maker, for $5.8 billion. In early trading, the Dow Jones industrial average fell 52.15 points, or 0.45 percent, while the broader Standard & Poor’s 500-stock index lost 4.04 points, or 0.3 percent. The technology heavy Nasdaq declined 7.49 points or 0.3 percent.

Gold Rises A Bit But High Prices Limit Buying



The most actively traded contract, for February delivery was recently up $4 at $1,372.90 a troy ounce on the Comex division of the New York Mercantile Exchange. “It’s in a holding pattern right now,” said Bob Haberkorn, senior market strategist with Lind-Waldock in Chicago. “It’s not getting that lift that it has over the previous six weeks.” Prices have been fluctuating between the mid $1,300s and record highs in the mid-$1,400s for the past two months amid alternating bouts of market fear or optimism about the global economic recovery.

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