As European leaders scramble to find remedies for a debt crisis that is threatening to spiral out of control, hedge fund managers in the United States have been finding ways and means to profit from Europe’s troubles. According to fund managers interviewed by Reuters, “there are a multitude of strategies to play Europe’s troubles, and many different participants.”
The multi-billion dollar shale energy industry in the U.S. is indirectly triggering a massive rush to harvest guar beans in India, claimed a report by Reuters on Monday, as thousands of farmers seek to capitalise on what is now a key ingredient in the U.S. hydraulic fracturing process.
As recently as six months ago, one didn’t discuss in polite company in Madrid the possibility that Spain would leave the euro and restructure its debt. The prospect was unthinkable and like many unthinkable things it could not be discussed. But perhaps things have changed. If responsible policymakers, advisors, the press, and public intellectuals are indeed discussing and debating the future of the euro now, a real and open debate about Spain’s prospects will quickly move the consensus towards abandoning the euro.
The gathering of European leaders last week failed to bring any clarity on the euro’s future and outlook. Neither progress was made over the debt crisis, nor any commitment from eurozone leaders to prevent the imminent Grexit, or Greece’s exit from the euro. Until a decision is made, the euro and eurozone markets will continue in its vulnerable state, threatened by the weight of huge capital outflows.
Monday, May 28
The Malaysian government is attempting to claim compensation from several organisers of the recent ‘Bersih’ (clean in Malay) mass protest rally for fairer elections, after alleging that the campaign’s street-wide demonstrations had caused significant damage to public and government property.
Japan has retained its position as the world’s top creditor nation in 2011, a title it has held on to for the past 21 years. According to data released by the Ministry of Finance, Japan held a net 253 trillion yen ($3.19 trilion) in foreign assets at the end of 2011, a 2 trillion yen increase from the previous year.
The data may help ease worries in Japan that China might soon surpass it as the world’s largest creditor nation, further eclipsing Tokyo’s presence in the global economy.
The global economy is slowing gaining momentum, but the Organisation for Economic Cooperation and Development warns that recovery is extremely uneven across different regions and could be derailed by the crisis in the euro area.
In its twice-yearly economic outlook, the Paris-based Organisation for Economic Cooperation and Development forecast that global growth would ease to 3.4 percent this year from 3.6 percent in 2011, before accelerating to 4.2 percent in 2013, in line with its last estimates from late November.
The United States has allowed China to purchase government debt directly from the Treasury Department, bypassing primary dealers in Wall Street. According to Reuters, the agreement is the Treasury’s first-ever direct relationship with a foreign government.
Under the arrangement, the People’s Bank of China, the single largest buyer of US debt, will be able to purchase bonds via a direct computer link to the Treasury’s auction system. However, if China wants to sell the bonds it still has to go through the market.
South Korea’s defence ministry plans to spend up to 2.5 trillion won ($2.1 billion) over the next five years in order to purchase 500-600 new cruise and ballistic missiles that will supplement the nation’s defence against the neighbouring North Korean military, said a report by the Yonhap News Agency on Tuesday.
Chinese Premier Wen Jiabao has called for stimulus policies that would boost the nation’s slowing economic prospects, raising expectations that the government will undertake new expansionary measures to prevent a hard landing for the world’s second largest economy.
Speaking to reporters during a visit to the city of Wuhan, Premier Wen gave no details of the possible new measures, but added that it was necessary to keep inflation in check, while keeping growth a top priority.
