Swaps provide protection against non-payment of Russian bonds rose 52 basis points to 194 points over last quarter – the biggest growth since the end of 2008. Thus, five-year contracts worth more than providing protection on the bonds of Turkey (190 points), Indonesia (178 points) and Philippines (168 points), although all three countries have lower rates of Russia as Standard & Poor’s. Turkey and Indonesia are rated BB and BB-Philippines have. For the last Russian swap were cheap on May 18. 100 basis points in these instruments are equal to 1%. This is the annual premium on the nominal value of bonds, against which the swap will provide appropriate compensation in case of failure to pay the debt. Contracts are used for speculation credit-ability with the issuer. According to Russian Finance Minister Alexei Kudrin Russia’s largest energy exporter in the world deserves a higher rating of this BBB, awarded by Standard & Poor’s. The big jump in insurance costs of government bonds in Russia shows that investors do not agree with that. Kudrin claims of a higher rating based on the fact that the country has the lowest level of debt among the G-20. The IMF estimates that in 2010 Russian debt will be a level of 7.7 percent of GDP on average 80% for the group. Turkey’s debt is expected to reach 50% of GDP this year.
(more…)

Accumulating debt is a powerful drug such as alcohol and nicotine, and. In times of economic prosperity in Western consumer countries resorted to loans continuously to further improve their lifestyles. Companies, in turn, used the loans to expand their business. Investors invented with the help of new debt instruments with which to increase their returns. And while the boom continued, massive excess revenue over expenditure led to a happy and carefree life, rather than to difficulties in writing their analysis The Economist. Thus, in many years, rich countries debt increased by much faster than incomes. Thus, not only swell the public deficits and debt but private sector. In the U.S. private sector debt increased from 50 percent of GDP in 1950 to nearly 300%. Unusually high increase in debt due to major changes in public attitudes during the last century. In 19th century defaulting borrowers were sent to prison. Generation that survived the Great Depression, learned frugality. But with the penetration of credit cards in the 60’s of 20th century society requires the “buy now, pay later”. So failure simply becomes a choice of lifestyle, as the blame for it lies with the “irresponsible” creditor and not the irrationality of the debtor.
(more…)

The Leaders of the G-20 agreed that should be taken to reduce budget deficits. They extend to the statement that the action will begin to reduce the negative balances, but it will happen only if there is sufficient evidence that economic recovery is sustainable. Goal set developed countries up to 2013 budget deficits to be reduced halfway and 2016 to be stabilized level of indebtedness. It is clear from the general opinion released by the leaders of the G-20 after meeting over the weekend in Toronto. Other commitments that countries undertake the group is to tighten the rules governing banks. Expected in many countries to introduce more stringent capital adequacy and liquidity, analysts say. “Frankly, this is more than expected, because the questions are quite specific,” he said after meeting Chancellor Angela Merkel. “The fact that developed countries have adopted this goal is success,” said Merkel on the common goal of fiscal policy. The general opinion says that the countries of G-20 will maintain plans for promoting economic and will take joint actions to ensure sustainable recovery. This issue moderate tone of the common position and shows that attempts to approximate the views of the United States and Germany did not have success. Discrepancies between the two countries are linked to Barack Obama calls Germany to increase government spending and to try to stimulate domestic consumption. Chancellor of Germany’s intentions however are fundamentally opposed by Merkel insisted on limiting spending and deficit control.
(more…)

The price of gold reached a new historic high, passing more than 1265 dollars an ounce. The main reason for this article suggests that the central banks of developing countries have purchased more gold than was expected beforehand. The new price is a record 265.30 dollars an ounce, and was placed on the London stock exchange today. ‘Precious metals won because the status of “island life” and strong demand likely will continue as long as doubts remain in the ability to successfully resolve the debt crisis in Europe, “said Carsten Frich of Commerzbank. The main news, which determines market sentiment today is related to the decision of China to increase flexibility in their exchange rate. Many believe this will lead to appreciation of Chinese currency against the dollar – something that U.S. demand for quite some time. Rubies economist Nouri does not share this vision and warns that the result of China’s decision may be further depreciation of the yuan against the dollar.
(more…)

The shares will probably continue to fall and lose another 20% of its value since the global economy weakens. It said American economist Nouri Rubini to television channel CNBC. According to the analyst, who recently predicted decay and within days the euro area, stock quotes and raw materials will decrease and investors may feel safe if you invest your money in cash or seek other shelter. Market adjustment, the weakness of the euro area and the economic slowdown in the U.S. and other developed countries will make things more difficult for investors in the coming months. There are parts of the world economy faced the risk of re-recession. From now on, things will get worse, “said Rubini. Stock prices and raw materials will decrease and investors may feel safe for use in cash or seek other shelter. He said there is also a regulatory risk because no one knows exactly what will be the financial reforms. Then investors should focus on buying the debt of countries which are economically viable. Rubies specify for example Germany and Canada and several other developed economies, whose financial health is good.
(more…)

The U.S. markets will delete the profits of the last six months within a few weeks, said yesterday in an interview with Reuters Robert Prechter, president of Elliott Wave International. In last night session on Wall Street and the three major U.S. indexes lead withdrew completely from the beginning of this year. Prechter was told that the market crisis of 2007-2009 and U.S. recession are generally a precursor to acute and prolonged economic crisis. Already in 2002 he warned of the dangers of deflationary depression. Technical Analyst, known prediction the stock collapse of 1987, continues to believe that the U.S. economy will suffer in the coming years. Prechter advises investors to choose the most safe investments like government securities or even fast cache based on expectations of long-term economic weakness. He believes that risk assets will suffer losses as a result of a new wave of deflationary global credit markets, preceded by the Greek debt crisis. Prechter maintains its January that the dollar will continue to become more expensive against the euro for about another year. He predicts a huge increase in yield spreads on U.S. corporate bonds to that of U.S. government securities, which he had already started. In the next few months the spreads on bonds non-investment rating is likely to expand substantially, analysts say.
(more…)

The crude oil fell to a six-week bottom for deepening decline in the euro. Single item lost positions dramatically because the problems of Greece, which reflects favorably on the U.S. dollar. During yesterday’s trading session in New York, oil fell 3.4 percent to 79.97 dollars per barrel, which is the lowest level in six weeks. The single currency did collapse to levels from March 2009, which severely limited interest in investing in commodities. During the night the price of oil has lost more than a percentage to give a level 78.90 dollars a barrel this morning. The euro fell to hand 1,2737 EUR / USD this morning, which had not happened by 10 March 2009 onwards, writes Bloomberg. Thus, within one week, the euro has dropped by over 3,5 per cent, and the retreat of the last half-year exceeds 14%. Exchange in London yesterday by Brent oil fell 3.6 percent to 82.61 dollars a barrel.
(more…)

The U.S. index Dow Jones Industrial Average reported 998 points or 9% drop in the beginning of today’s session. Subsequently, the panic was overcome and the decline is limited to 3.2%. Computer error led to a decline in shares of Procter & Gamble with 37% who downloaded DJ decline by about 2% and the remaining decrease was the result of panic is one version of the strong reduction, confirmed by the market operator NYSE Euronext. The Exchange has launched an investigation of the case. News from Greece, expectations for increases in interest rates and overheating in China, other factors are heavy on the market after 18 months achieved Scores of Western indexes. Stock indexes in Europe again loss as sales increase in the late trade. This gave rise to the retreat of shares in the financial sector caused by the passivity of the European Central Bank on increasing liquidity in the euro area. The regional index Dow Jones Stoxx 600 fell 1.5 percent to 247 points today and is already moving at a weekly decline of 4.7 per cent targets. The financial sector was particularly affected by the passivity of today’s ECB decision to keep eurozone interest rate at 1 percent. Shares of Barclays sank by 6.5 per cent and those of Credit Suisse fell by 4.1 per cent. The market capitalization of the Spanish BBVA fell 4.76 per cent.
(more…)

The U.S. indexes suffered decline for the second straight day on Wednesday amid growing concerns about the debt crisis in Europe and the strong dollar, which negatively affected the prices of resources, writes MarketWatch. Industrial, energy and mining sector resources were most affected, but financial statements showing the growth in services and data to reduce unemployment have helped mitigate the decline. Dow Jones Industrial Average fell 0.55 percent to 10,867 points, 16 of 30 blue chips closed in the red. “There are problems with the national debt in many countries in Europe, but does this mean that the market is worth 5% less than three days?” Said Art Hogan market strategist at Jefferies & Co. S & P 500 Index fell 0.66 percent to 1166 points, the most poorly known companies in the energy sector. Nasdaq Composite Index fell 0.91 percent to 2402 points. “Overall, the financial statements of companies are good and there are signs that the economy is doing well,” said Kevin Kruzenski, director of the KeyBanc Capital Markets. After the U.S. indexes suffered their worst decline for the past three months on Tuesday, trade began on Wednesday with a new decrease, influenced by growing concerns about the stability of the financial situation in Europe after violence broke out in Athens and is expected to decrease the credit rating of Portugal . “Uncertainty hovers over European markets and of course comes to us’, says Kruzenski.
(more…)

The European leaders agreed to create shield fund to halt the spread of Greek financial problems and to avoid undermining confidence in the single European currency. Frightened by the drop-down euro and rising yield on Portuguese and Spanish bonds, the eurozone leaders said details of the preventive mechanism would be made before the opening of financial markets on Monday. “We will defend the euro at any price,” said President of the European Commission (EC) Jose Manuel Barroso during a summit in Brussels. Europe’s inability to rein in the Greek financial crisis led to a 4.3 percent decline of the euro during the week and led the U.S. and Asia to unite in trying to prevent the global debt crisis, to push the world back into recession. It was not disclosed the size of the stabilization fund which will be completed by loans guaranteed by governments of EU member states. Details yet to be specified on the ongoing meeting. “It will be very clear signal to those who want to speculate against the euro,” said Chancellor Angela Merkel. The question of whether anti-speculation market will include restrictions on short sales and agreements for the protection of bankruptcy, Barroso responded that “some of them will be considered. He said he will not exert pressure on the independent European Central Bank (ECB) for the purchase of government bonds.
(more…)