Markets

Putin Calls U.S. ‘Parasite’ as Russia Gorges on Its Debt

Bloomberg

For Russian Prime Minister Vladimir Putin, the U.S. is a “parasite” because its rising debt weighs on the global economy. For his government, the same debt is the safest possible investment.

Russia, the world’s largest energy producer, has boosted its holdings of U.S. debt by more than 1,600 percent since September 2006, according to U.S. Treasury Department data. Russia used surging commodity prices to build the world’s third- largest reserves pile, boosted in part by return on Treasuries.

Putin, 58, who oversaw the largest buildup of U.S. debt holdings in Russia’s history as president from 2000 to 2008, may return to the post after elections next year. The country is now one of the world’s 10 largest holders of the securities with $110 billion at the end of June, about 70 percent more than when Putin left the Kremlin.

“They are sending out a message” largely for domestic consumption, Edwin Gutierrez, who helps manage about $7 billion in emerging-market debt at Aberdeen Asset Management in London, said in a phone interview on Aug. 17. “It’s ironic that these voices of complaint come as they experience massive capital appreciation.”

Goldman Asset Management chairman Jim O'Neill bets on the US

The Telegraph

For his final analyst note of 2010, Jim O'Neill has placed his not inconsiderable stash of intellectual chips on the US.

As he revealed in his interview with us earlier this month, the chairman of Goldman Sachs Asset Management believes that America will bounce back strongly next year.

In his predictions for 2011, released last week, Mr O'Neill sites Goldman's own forecasts which put US growth at between 3.4 and 3.8pc, comfortably outpacing the UK. This, he believes, will lead to a fall in unemployment which will have the knock-on effect, if it happens, that "the worst of the social consequences of the credit crisis should start to ease".

Lehman 'prophet' fears second crisis if US interest rates are kept low

The Telegraph

America is storing up a second financial crisis by keeping interest rates at record low levels, according to David Einhorn, the hedge fund manager who first publicly warned about the financial catastrophe facing Lehman Brothers.

"The crisis that required zero interest rates has passed," said Mr Einhorn, who co-founded and runs Greenlight Capital, a $6.5bn (£4.2bn) fund. By not raising rates "it increases the chance that governments will over-borrow and fall into a debt trap".

The criticism of the Federal Reserve comes as it embarks on another $600bn (£380bn) of quantitative easing – or printing money – in an effort to fire up a stronger recovery next year.

The UK inflation genie is out of the bottle

The Telegraph

I'm a natural optimist and don't wish to upset anyone's Boxing Day celebrations. Any commentator worth their salt, though, at times like this, should ignore such sensitivities. It would be wrong – reckless, in fact, given the slew of recent bad data – to fail to point to the worrying mix of economic issues the UK now faces.

During 2011, the British economy will suffer from rising inflation and sluggish (in some quarters, possibly negative) growth. This grim combination will be set against a budgetary situation that can only be described as ghastly.

George Osborne was recently in New York, soaking up plaudits for boldly leading Britain into fiscal austerity at a time when, apparently in contrast, America's feckless political elite has allowed the national debt to balloon. The problem is that UK austerity, so far at least, is a myth.

$2tn debt crisis threatens to bring down 100 US cities

Guardian

Overdrawn American cities could face financial collapse in 2011, defaulting on hundreds of billions of dollars of borrowings and derailing the US economic recovery. Nor are European cities safe – Florence, Barcelona, Madrid, Venice: all are in trouble

More than 100 American cities could go bust next year as the debt crisis that has taken down banks and countries threatens next to spark a municipal meltdown, a leading analyst has warned.

Meredith Whitney, the US research analyst who correctly predicted the global credit crunch, described local and state debt as the biggest problem facing the US economy, and one that could derail its recovery.

Putin Calls U.S. ‘Parasite’ as Russia Gorges on Its Debt

Goldman Asset Management chairman Jim O'Neill bets on the US

For his final analyst note of 2010, Jim O'Neill has placed his not inconsiderable stash of intellectual chips on the US.

Lehman 'prophet' fears second crisis if US interest rates are kept low

America is storing up a second financial crisis by keeping interest rates at record low levels, according to David Einhorn, the hedge fund manager who first publicly warned about the financial catastrophe facing Lehman Brothers.

The UK inflation genie is out of the bottle

$2tn debt crisis threatens to bring down 100 US cities

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