Consumer Borrowing Collapses…What’s up with sterling? Option ARMs get ready to reset…Gold falls back to below $1,000…And Now… Today’s Pfennig!

Good day… And a Wonderful Wednesday to you! Well… The currencies, for the most part, kept the heat on the dollar throughout the day and in the overnight markets. The euro, did rise to 1.45 and change yesterday, while it is hovering right at that figure this morning, so it did give a little bit back.

There were no big announcements last night like we saw on Monday, so the currencies didn’t have anything to push them further. In fact, there may be a “letting the dust settle” period of time, with the Big Dog, euro, before we see any further advancement, given the euro’s huge gains yesterday…

We did have “Mr. Yen” Sakakibara, tell a crowd of people that he

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The rating agencies have to review their quality control procedure after all the legal hassles they have faced recently. A bill has been placed in the U.S. Senate to review the functioning of the rating agencies. But it is expected that it will be rendered ineffective by the time it reaches the President, and only a part of the problem will be addressed.   Rating agencies such as Fitch, Moody’s Investor Service (MCO), Standard & Poor’s Rating Services, and A.M. Best have recently come up against some strong criticism. This led to the Rating Accountability and Transparency Enhancement Act (RATE) of 2009, which was introduced in May. The bill has been referred to the Senate committee, but has not yet been passed. As per the new bill, the Securities and Exchange Commission (SEC) will be empowered to monitor the functioning of the rating agencies. Besides, both retail and ...

Following FPIC Insurance Group, Inc’s (FPIC) agreement to acquire Advocate, MD and its subsidiaries on July 30, A.M. Best has commented that all the ratings on FPIC and its subsidiaries remain unchanged.  We think that this is primarily to support the company’s acquisition decision.     The all cash deal was signed between FPIC’s subsidiary, First Professionals Insurance Company, Inc., and Advocate, MD Financial Group. Inc. The total deal value includes $33.6 million at closing of the transaction and up to $12.0 million related to the performance of Advocate, MD over the couple of years following the closing of the deal.   As the nature of the business of Advocate, MD is almost similar with FPIC and the deal is consistent with FPIC’s long-term business strategy, we think that FPIC will gain significant scale in its operations by this acquisition. The company will also get advantages of the ...

Bloomberg reports that Ghana’s Eurobonds have surged 93% since last November and may continue to rise given the country’s increasingly attractive fiscal position due in part to the production of a new oil field that is expected to put it in the world’s top 50 oil producers and to expand growth from an estimated 4.1% this year, to 6.1% in 2010 and 10.5% the year after. The yield on the 8.5% dollar-denominated bonds due 2017 fell from 9.83 to 9.73 percent during trading on Tuesday.

Ghana was the first post-HIPC (Heavily Indebted Poor Country) debt relief country to access the international capital markets, after being assigned a favorable credit rating of B+ in 2007 by the Fitch, the global rating agency. While a slew of other African nations such as Kenya, Tanzania and Nigeria lined up in response, capital markets and risk appetite shriveled during the ensuing

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Norilsk Nickel shareholders have voted to invite a state representative, Vasily Titov, deputy chairman of state-run VTB Group, to their board, to give the company additional support during the crisis.  Russian Railways chief Vladimir Yakunin has recommended the government consider nationalization of crisis-hit industries to alleviate social tensions.  Four minority shareholders of High River Gold Mines have asked the company to reject Severstal's offer of 19 US cents per share, saying that the Russian steelmaker should raise the bid fivefold.  GAZ Group, the main employer in the Nizhny Novgorod region, will make around 6,500 people from its main production site redundant.  A high-ranking executive at ratings agency Fitch says that Russian banks will need $20 billion to $80 billion in extra capital this year.  The Magna-Opel deal is said to be in jeopardy as GM Europe ...

As California goes, so will the US. It is our strong suspicion here at Notes that California’s fiscal crisis (what is really a profligate spending crisis) is but a prelude to the coming national debt crisis.

Last Thursday, ratings agency Fitch dropped the Golden State’s credit rating to A-minus and immediately placed that on negative credit watch. California shares three major problems with the US. It faces:

A crippling budget deficit Declining tax revenues A legislature that won’t face up to critical issues.

Over the weekend, we read in wonder that by the non-partisan Congressional Budget Office’s own estimation America’s national debt is now growing so quickly that it will exceed the size of the economy in 2023 – seven years earlier than the projections of the last report just 18 months ago!

This from The Caucus, the politics and government blog at the New York Times:

The culprit is not the huge sum of stimulus spending that President ...

by Edward Hugh: Barcelonabr /br /Well that so called investor "risk appetite" took a surprise hit yesterday (and from an unexpected quarter). It wasn't the worries about US fiscal deficits that caused the panic, but problems in the European banking system. a href="http://ftalphaville.ft.com/blog/2009/06/16/57171/investor-fears-cut-risk-appetite/"Gwen Robinson reports/a:br /br /blockquoteRisk appetite suffered a sharp deterioration on Monday as fresh uncertainty about the global economy prompted investors to shift from equities, commodities and emerging market assets into the perceived safety of government bonds and the dollar. Markets were further unnerved by warnings on the economic outlook from the head of the IMF and an ECB report saying eurozone banks face another $283bn in writedowns on bad loans and securities this year and next./blockquotebr /As Izabella Kaminska notes, a href="http://www.facebook.com/ext/share.php?sid=117027956538h=wHY-pu=bc40uref=nf"it is Southern Europe that is now getting all the attention/a.br /br /blockquoteThis time it’s the turn of 25 Spanish banks, all of whose senior ratings ...

Ratings agency Fitch a title=toyota target=_blank href=http://www.marketwatch.com/News/Story/Story.aspx?guid=%7B476C565F-AB85-4C6B-B02E-48D8D8D3E744%7Dsiteid=yhoof2downgraded Toyota/a debt from AAA to AA. brbrMultiple negative developments, including the rapid and significant appreciation of the yen, the concurrent downturn in all major auto markets and high raw material costs, have occurred simultaneously and are impacting earnings and cash flow, even for the strongest players in the sector.

Emerging markets look like they are in for another rough week, Russia included. The Financial Times is reporting that the rating agency Fitch has downgraded the credit rankings of Bulgaria, Hungary, Kazakhstan and Romania, and slashed the long-term currency outlook from stable to negative for South Korea, Mexico, Russia and South Africa. It seems that the market is unimpressed by the Russian government's efforts to handle the crisis, which consists of Dmitry Medvedev calling for the extension of term limits and authorizing the police to "crush" any crisis-related protests. It looks like the halcyon days of profitable authoritarianism may be drawing to a close...

Business New Europe Jason Corcoran in Moscow October 28, 2008The richest man in Ukraine and reputedly the whole of the former Soviet Union, Rinat Akhmetov, is embarking on a bold acquisition programme to pick up cheap energy assets across Central and Eastern Europe at a time when other oligarchs in the region are sweating over making margin calls. Akhmetov, estimated by the Russian daily Kommersant to be worth $31.5bn, has largely been insulated from the international financial crisis due to the consistent demand for coal and electricity and his minimal exposure to the equity markets. DTEK, Akhmetov's main Ukraine-based energy holding, is now talking to banks about assembling a cash pile to target coal assets worth up to $500m in Russia and the rest of Central and Eastern Europe. "We are pretty ...