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    Daily Digest 12/6 – Eurozone Crisis Talks, Gold Trades Near Record, Hungarian Assets Slip

    by DailyDigest

    Monday, December 6, 2010, 4:00 PM

  • No, The Big Banks Have Not “Paid Back” Government Bailouts and Subsidies
  • Branson Says Crude Oil Prices Might Hit $200 a Barrel Without New Policies
  • Eurozone Ministers Set for Crisis Talks
  • Gold Trades Near Record on Concern U.S. Economy May Need Further Stimulus
  • Getting JAL On Its Feet
  • Hungarian Assets Slip On Moody’s Downgrade
  • Crude Wavers Amid Higher Dollar, European Concerns

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No, The Big Banks Have Not “Paid Back” Government Bailouts and Subsidies (hucklejohn)

To get a clear picture of what is going on here, ignore the intermediate steps (borrowing money from the fed, investing in Treasuries), as they are riskless, and it immediately becomes clear that this is merely a direct payment from the Fed to the banking executives…for nothing. No nifty new tech product has been created. No illness has been treated. No teacher has figured out how to get a third-grader to understand fractions. No singer’s voice has entertained a packed stadium. No batter has hit a walk-off double. No “risk”has even been “managed”, the current mantra for what big banks do that is so goddamned important that it is doing “god’s work”

Branson Says Crude Oil Prices Might Hit $200 a Barrel Without New Policies (solidswede)

“It’s certainly conceivable unless we can start to conserve energy quickly and come up with alternative fuels,” Branson said yesterday in Cancun, Mexico, where countries are meeting to negotiate a new accord to combat climate change. Branson predicts an “unbelievably painful” economic slump if governments don’t do more to encourage renewable energy as an alternative to fossil fuels such as oil. In the U.S., where efforts to cap carbon-dioxide emissions failed in the Senate earlier this year, unemployment could reach record highs, the British billionaire said.

Eurozone Ministers Set for Crisis Talks 

Finance ministers from the 16 eurozone nations are expected to debate new ways to combat the continuing debt crisis at a meeting on Monday night amid growing signs of discord over how to allay fears in the bond market that further bail-outs might be needed. Ahead of the meeting in Brussels several ministers have publicly proposed new measures – including raising the amount in the eurozone’s €440bn ($583bn) rescue fund and creating a Europe-wide bond – aimed at improving the European Union’s system of dealing with rising borrowing costs for so-called “peripheral” countries.

Gold Trades Near Record on Concern U.S. Economy May Need Further Stimulus

The dollar climbed against the euro as European officials voiced divisions over the steps needed to stop the sovereign- debt crisis. Federal Reserve Chairman Ben S. Bernanke said the central bank may boost Treasury purchases to prop up the economy. Gold futures, which usually move inversely to the dollar, traded within 1 percent of a record $1,424.30 an ounce set on Nov. 9. Bernanke’s comments “are largely bullish for precious metals,” Walter de Wet, an analyst at Standard Bank Plc in London, wrote in a report. “More liquidity means a further boost for precious metals, especially gold, as well as a weaker dollar.”

Getting JAL On Its Feet (guardia)

Japan Airlines Corp. on Nov. 30 received approval from the Tokyo District Court for its reconstruction plan. JAL achieved a consolidated operating profit of ¥132.7 billion in the April-October period helped by a strong yen and a temporary upturn in the Japanese economy. But the reconstruction of JAL won’t be easy, given its internal problems and possible competition from low-cost carriers. It needs to turn itself into a competitive firm within two years or so.

Hungarian Assets Slip On Moody’s Downgrade 

The forint slipped in early London trading by 0.7% against the euro, Hungarian government bonds rose by 10 basis points across the curve on the secondary fixed income market and stocks also dropped, although losses were indirect there as they were due mainly to the easing forint. In a further negative sign, the cost of insuring Hungarian sovereign debt against default rose following Moody’s action. According to data provider Markit, Hungary’s five-year sovereign credit default swaps–a key measure of credit risk–were around 16 basis points wider at 381 basis points. In just a month, Hungary’s CDS spreads have risen over 90 basis points.


Crude Wavers Amid Higher Dollar, European Concerns 

European authorities are set to convene later Monday to discuss ways to contain Europe’s debt crisis on the wake of a bailout for Ireland that did little to convince markets of Europe’s financial health. Read more on divisions within the euro-zone on dealing with the crisis. “While the financial markets continue to focus on euro-zone debt risk, the future of the euro and the size of any bailout fund that is needed, the oil market seems to have divorced itself from these concerns, and despite (Monday’s) correction, prices remain robust,” analysts at J.P. Morgan said in a note to clients Monday.

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