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SocGen's proposed portfolio for a global economic collapse

French bank Société Générale has advised clients to be ready for a possible "global economic collapse" over the next two years, The Telegraph reports.

In a 68-page report titled "Worst-Case Debt Scenario," SocGen explains that the rescue packages over the past year have merely transferred private liabilities onto government shoulders, creating a fresh set of problems. Debt levels, public or private, are too high as a share of GDP. The deleveraging process will take years.

Continue reading SocGen's proposed portfolio for a global economic collapse

Comfort Zone Investing: The unmighty dollar

The dollar doesn't buy what it used to, especially if it's something made in another country. When the dollar is weak, imports cost more because it takes more dollars to buy a foreign product. And the weak dollar is just the way our government likes it.

That's because the other side of the dollar bill is that when it's weak, U.S. products become cheaper for other countries to buy. While China is having a resurgence in its economy, it will buy more goods and services, many of them from the U.S. Our stuff is a bargain because it doesn't take as many renminbi to buy dollars. U.S. manufacturers take their renminbi, buy dollars and repatriot the money. They still make the same profit on the product and enjoy stronger sales, due to the weak dollar.

Continue reading Comfort Zone Investing: The unmighty dollar

Consumer spending falls victim to debt repayment

Consumer borrowing fell for the eighth straight month in September. This record-setting streak is due largely to tightening by lenders, unemployment and the conservative preference to pay down debt rather than spend. This widespread fit of fiscal responsibility, economists fret, could prevent a recovery from taking root, since consumer spending is responsible for 70% of the U.S. economy. This conventional thinking, of course, overlooks the fact that an eventual increase in spending that isn't fueled by consumer spending will yield a recovery that's more likely to last.

According to the Federal Reserve, borrowing fell at an annual rate of $14.8 billion in September -- it's biggest drop since July and much larger than the $10 billion predicted by economists. The behavior is exactly what you'd find in people worried about losing their jobs or focused on rebuilding safety funds and investment portfolios. Those who want to borrow are finding banks won't be complicit this time, as they clamp down on lending practices.

Continue reading Consumer spending falls victim to debt repayment

Employee productivity up close to 10%

Work smarter not harder. Do more with less. Increase your output. Become more productive.

You've heard all this before, right? What it all means is that layoffs are coming, and the survivors are going to have to take on a hell of a lot more work, with no increase in support, resources or compensation. As cuts come, the survivors fight to survive, and succeeding means that a new benchmark is set. If you can survive without the help you used to have, it's easier to defer hiring for a while.


Continue reading Employee productivity up close to 10%

Iceland is now open for business once more

You're now free to invest in Iceland ... should you be so inclined. On Sunday, the country will begin lifting its post-financial disaster capital controls, giving investors a bit more elbow room. Foreign currency investments coming in won't be subject to the existing controls.

According to a statement released by Iceland's central bank, "Investors are authorized, without restrictions, to convert into foreign currency the sales proceeds from assets in which they invest after Nov.1." The statement also said, "Previously, non-residents were fully authorized to transfer foreign currency deriving from interest and dividends on investments in Iceland."

Continue reading Iceland is now open for business once more

Bad September, good Q3 for consumer spending, what's next?

Consumer spending had its largest fall this year, thanks to the end of the "Cash for Clunkers" program. And, incomes were flat. No change to the money coming in and a drop in the cash going out translates to an impediment to economic recovery.

In September, consumer spending fell 0.5%, the first decline in five months and the worst in nine. Wages and salaries dropped 0.2%, effectively offsetting the 0.2% up-tick in August. The economy did grow in the third quarter of 2009, hinting that the worst recession in 70 years may be coming to a close, but the tough September suggests we still have some work in front of us.

Continue reading Bad September, good Q3 for consumer spending, what's next?

Cramer on BloggingStocks: It's not the worst case, but...

TheStreet.com's Jim Cramer still doesn't like this market -- the good GDP figure isn't enough to sustain us.

You know when you have gotten too negative? When you pick up the paper and the lead story is "Slump Sinks Visa Program," and you say, "That's it! I can't take it ... Visa was the one bright spot in my portfolio, and now they've taken that away!"

Then you read the story and you know it is not about bank fee rates or credit card usage or congressional bashing for once, but about a skilled workers program. It has nothing to do with the red-hot Visa (NYSE: V) (Cramer's Take) at all.

Continue reading Cramer on BloggingStocks: It's not the worst case, but...

Third-quarter GDP shows growth -- is the recession over?

It appears that the U.S. economy may finally be dragging itself out of the economic doldrums. At least, that is what the third-quarter Gross Domestic Product indicates. The GDP showed that the U.S. economy grew at a 3.5% annual pace in the third quarter, snapping a four-quarter contraction streak.

The growth is attributed to the massive government stimulus, which led to higher consumer spending. In addition, a reduction in inventories and robust government spending helped spur growth in the third quarter. But even excluding the influence of auto sales, production and inventories, the economy grew 1.9 percent last quarter.

Continue reading Third-quarter GDP shows growth -- is the recession over?

Chicago Federal Reserve index of economic activity weakens

The Chicago Federal Reserve has an index of economic activity for the region. In September, the index weakened. It stood at a minus 0.81, down from a minus 0.65 in August and a minus 0.90 the previous month.

A reading at zero or above indicates expansion in economic activity. Unfortunately, these readings show that the region is still in a deep recession.

The Chicago Fed uses a three month moving average to smooth out the raw numbers. Using that average, the reading for September was a minus 0.63, and a minus 0.96 in August.

Continue reading Chicago Federal Reserve index of economic activity weakens

S&P overvalued by 40%, according to economist Smithers

Economist and president of a research firm that bears his name, Andrew Smithers (not related to the Smithers of Mr. Burns fame) is saying our on-fire stock market is set to burn itself out. The S&P 500 Index is overvalued by 40%, he believes, and we can expect a plunge thanks to central bankers restraining themselves on the securities purchases that have pushed the markets up so far so fast. Also, banks are going to need to sell more shares to raise capital and pump up their balance sheets.

If the S&P 500 were to take a 40% dive today, it would fall to 647.76 (based on the Friday close), below the low it recorded in March.

Continue reading S&P overvalued by 40%, according to economist Smithers

Beige Book: US economic conditions have stabilized or improved modestly

What is the Beige Book and what does it contain? The US Federal Reserve keeps anecdotal reports on the economy in what is called the "Beige Book." Here are some notes on the key topics:

  • There was some improvement in two of the hardest hit areas -- residential real estate and manufacturing.
  • Gains in economic activity generally outnumbered declines.
  • "Grim" was how the Fed described commercial real estate, "with conditions described as either weak or deteriorating across all districts." Regional banks said they did not see improvement in commercial real estate going forward into 2010.

Continue reading Beige Book: US economic conditions have stabilized or improved modestly

Consumer sentiment drops: savings and debt repayment are culprits

The recession is only over if you ask the right people. While some sectors are starting to see the light at the end of the tunnel, consumers remain concerned. It may be tempting to listen to the experts over the average Joe, but the former don't control 70% of the U.S. economy. So, as long as people are worried abou unemployment (which continues to rise), the levels of debt they carry and whether they're at risk of foreclosure, the recession will live on in the hearts of those who write checks and swipe credit cards.

Continue reading Consumer sentiment drops: savings and debt repayment are culprits

Australia is the first G-20 country to raise interest rates

Australia, on Tuesday, became the first of the G-20 nations to hike interest rates when the Reserve Bank of Australia raised the cash rate from a 49-year low of 3% a quarter point to 3.25%.

As you might guess, the Australian dollar surged to a 14-month high against the U.S. dollar, trading at $0.8868 against its U.S. counterpart.

Continue reading Australia is the first G-20 country to raise interest rates

Oil rises despite increased inventories

oil pricesOil prices have risen sharply today, despite news that oil inventories rose more than expected last week.

Traders pushed oil up $2.92 a barrel Tuesday to $69.63 even though oil inventories rose by 2.8 million barrels last week verse analyst estimates for a rise of 2.1 million barrels.

Continue reading Oil rises despite increased inventories

Economy shrinks less than expected

GDP numbersThe Commerce Department released GDP numbers today for the second quarter, and showed that the economy shrank less than expected for the April - June period.

According to today's report, second quarter GDP figures dropped by 0.7%. Before the report, analysts had been expecting to see that GDP actually dropped by 1.1%, providing some fresh evidence that the economy will probably start growing again during the second half of the year.

Continue reading Economy shrinks less than expected

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Symbol Lookup
IndexesChangePrice
DJIA-14.2810,318.16
NASDAQ-10.782,146.04
S&P 500-3.521,091.38

Last updated: November 21, 2009: 03:00 PM

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