After almost a year of initiating the $700 billion Troubled Asset Relief Program (TARP), a lot has improved with respect to the economic crisis. Though the economy is in far better shape now than a year ago, there are persistent problems which need to be addressed by the government before shifting the strategy to growth. We believe that the U.S. economy will regain the growth momentum once these issues are resolved. On Thursday, U.S. Treasury Secretary Timothy Geithner said that the government won't provide additional funds to stabilize the financial markets and the government’s economic team has removed a $750 billion line item from the federal budget projections, since it is unlikely to be necessary. The TARP panel members, however, are not happy as most of the taxpayer-provided money was provided to financial institutions. But this is what was required as financial institutions are the backbone ...

Warren Buffett’s Berkshire Hathaway Inc (NYSE:BRK.A) is finally starting to offload its 20% stake in ratings agency Moody’s Corporation (NYSE.MCO).

Here are listed sales in the filing, courtesy of 24/7WallStreet.com:

· 7/20/09… 1,817,000 at $28.7269 average in open market sale.

· 7/21/09… 3,915,100 at $26.9188 average in open market sale.

· 7/22/09… 2,254,200 at $26.6425 average in open market sale.

What took Buffett so long to start selling Moody’s? We have no idea. Moody’s runs one of the biggest scams on Wall Street. It charges the companies whose securities it rates (just like Standard & Poor’s and Fitch also do).

So what do you think these ratings agencies did when presented with a whole load of junk mortgage-backed securities to rate? They assigned them investment grade status and pocketed the cash.

If these ratings agencies had instead acted honestly and responsibly (rather than pimping

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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 ...

Your co-editor is in Oslo, Norway, after a brief spell in his native Dublin. The contrast is stark.  The Irish economy soared during the good years, helped by low European interest rates and an unusually bubbly property boom.

The fall from grace has been spectacular. Ratings agency Standard & Poor’s recently downgraded Ireland’s sovereign debt to AA with a negative outlook.

The problem is the Irish government is doing its best to emulate Team Obama’s ‘solution’ to the financial crisis: prop up failed banks with capital injections and transfer banks’ bad loans to the taxpayer. As a result, Ireland is expected to see its national debt climb to more than 120% of annual GDP – a level even higher than other AA-rated eurozone countries.

By contrast, in Norway the financial crisis feels like a distant event. Your co-editor has been mightily impressed by how well everything works here. And the Norwegians,

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An investor buys an idea and waits for that idea to materialize. It might take minutes, hours, days, sometimes even years for that idea to materialize. The longer the time frame, the more likely the idea will materialize profitably, according to an recent article in May/June 2009 issue CFA Institute Magazine.

After it cut its outlook on the United Kingdom’s triple-A credit rating to ‘negative’ from ’stable’, last week Standard & Poor’s raised worries that the United States could lose its “AAA” rating. On May 27, Moody’s Investors Service, another ratings agency, said the U.S. government’s AAA rating is stable despite the country’s swelling debt. But it did not completely rule out a downgrade.  

A reassessment of the economy and the government’s debt could put “negative pressure on the rating in the future.” The UK faces a 33% chance of a

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Gold climbed to a fresh two-month high of $957.50 an ounce in Europe on Friday, extending the previous session’s near 2 percent gains, as investors bought the metal as a hedge against dollar weakness.
Silver prices posted the biggest gains among precious metals, however, climbing to a nine-month peak of $14.79 as investors turned to the metal as a cheaper alternative to gold.
Spot gold was bid at $956.95 an ounce at 1207 GMT, against $953.40 an ounce late in New York on Thursday. U.S. gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose $6.20 to $957.40 an ounce.
Simon Weeks, director of precious metals at the Bank of Nova Scotia, said the majority of gold’s gains were dollar-related, with investors “buying hard assets as opposed to hard currency”.
“Physical (buying) has been

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As my readers may have noticed I am pretty much letting my colleague Edward running the show at the moment in terms of detailing the fall from grace of European economies. It is funny to think about how it is under a year ago that the notion of decoupling was fiercely debated. What a difference a couple of bust economies and banks make eh? In any case, what follows will be some semi-random observations on last week’s and the coming ditto’s events. As a common theme I think it is safe to say that in the context of the European economy as well as in a more wonkish theoretical perspective on the global economy push, as it were, looks very close to becoming shove. 

 

Towards a Common European Answer?

As I mentioned last week, Q4 was an absolute horror story in terms of European data with an aggregate Eurozone contraction of

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HIDDEN VALUE

Dear Value Seeker,

With the markets closed today for Martin Luther King Day, it’s a good time to look at how the rest of the world is coping with the credit crunch.

The answer, unfortunately, is not very well.

The European Commission has slashed its growth forecast for the euro zone in 2009 to 1.9%. And it estimates that a recovery in 2010 to be a timid 0.4%.

Meanwhile, the so-called “PIGS” – Portugal, Ireland, Greece and Spain – are facing a financial disaster that could eventually threaten their position in the euro group.

Ratings agency Standard & Poor’s has already downgraded its credit rating for Greece and Spain. The other two outliers are under review.

In Britain, which analysts expect

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