China BRICS up Africa

China BRICS up Africa – There can be no two opinions that Beijing made a smart move. Its decision to anoint South Africa as a new member of BRIC (Brazil, Russia, India and China) will be projected as based on economic grounds, but there are any number of other dimensions.  The choice of South Africa can even be spotted as a gutsy move to disprove a prediction from Jim O’Neill, chairman of Goldman Sachs Asset Management and guru of the BRIC concept, that Nigeria was better placed to make the grade.  The next BRIC summit – or BRICS as it will now be known – is scheduled for April in Beijing, where for the first time South Africa will participate as a member of the group.  Arguably, why South Africa? In the size of its economy, growth rate or population, South Africa lags far behind the BRIC average.
 
Factories Expand 17 Consecutive Months, Jobs Don’t – The latest ISM reports show Factories grow for 17th straight month in December. Manufacturers produced more goods and booked more orders last month, leading to the fastest growth in factory activity since May. The Institute for Supply Management said Monday that its index of manufacturing activity rose to 57 in December from 56.6 in the previous month. Any reading over 50 indicates growth. The latest is well above the recession’s low of 32.5, hit in December 2008. But it’s below the reading of 60.4 in April, the highest level since June 2004. The report shows that manufacturers carried considerable momentum into the new year. Automakers, computer and electronics companies, and industrial machinery firms showed particular strength,  In spite of 17 consecutive months of manufacturing expansion, hiring was only up 7 of those months, and not once in the last 4.The BLS Current Statistics report shows November lost 13,000 jobs, October 11,000 jobs, September 6,000 jobs and August 26,000 jobs.
 
National Debt Ends 2010 By Topping $14 Trillion – There was a nice little New Year’s Eve present from the Department Of The Treasury that you might not have heard of Some milestone’s worth noting:
  • The national debt passed the $ 13,000,000,000,000 mark on June 3, 2010. It took 212 days for an additional trillion dollars to be added to the national debt.
  • Before that, it last passed a milestone number on November 17, 2009 when it hit $ 12,000,000,000,000. It took only 198 days for an additional trillion dollars to be added to the national debt.
  • Since Barack Obama took the Oath of Office, the national debt has increased from $ 10,626,877,048,913.08 to $ 14,025,215,218,708.52. That’s an increase of $ 3,398,338,169,795.44 in 710 days.
Personal Bankruptcies in 2010, by State – Personal bankruptcies rose 9% to 1,530,078 in 2010 from a year earlier, reaching their highest level since a revamp of the bankruptcy law took effect in 2005, according to the American Bankruptcy Institute, an association of attorneys and other bankruptcy professionals, and the National Bankruptcy Research Center. But some states fared better than others. Southern states such as Tennessee, South Carolina, North Carolina, Alabama and Kentucky posted declines in the number of bankruptcies recorded last year. Meanwhile, states still struggling with housing busts, such as California, Arizona and Florida were among those with the largest increases.

The Oil – Employment Link, Part 1 – From what I can see, oil consumption and employment are very closely linked. It is this link that seems to be contributing to the unemployment problems we have now in the US. Going forward, we know that the US is heavily dependent on oil imports. If these drop, either because world oil production is dropping, or because world oil production is close to flat, and the US is being outbid for the oil, then it seems likely that employment in the United States will drop even more. These are a selection of slides from my presentation:

Bankruptcies top 1.5 million in 2010— The number of Americans filing for bankruptcy in 2010 ticked up 9% over the previous year to more than 1.53 million, industry groups said Monday. The number of consumers filing for bankruptcy has increased each year since 2005, when bankruptcy laws were revamped, according to the American Bankruptcy Institute and the National Bankruptcy Research Center.The 2010 figure far outpaces the 1,407,788 total consumer filings that were recorded during 2009, a trend that the American Bankruptcy Institute attributes to high debt and a stagnant economy."The steady climb of consumer filings notwithstanding the 2005 bankruptcy law restrictions demonstrate that families continue to turn to bankruptcy as a result of high debt burdens and stagnant income growth,"

Australia Flood Is Concern For Coal Prices, A Commodities Lesson – Floods not seen in the modern era have shuttered coal mines throughout an area of Queensland, Australia, the size of Texas. Several large international miners, including Rio Tinto (NYSE: RTP), will take huge losses. That is only part of the trouble. The interruption may go on for months, which will almost certainly make the price of coal rise. There is a significant coal shortage in China, and there is no immediate relief for the problem. China is a major consumer of coal just as its is of crude oil. Demand from the world’s second largest economy by GDP will push up prices. The coal mine problem in Australia could have an immediate effect on steel prices. The island nation produces about half of the world’s coking cola for the steel industry. Coal prices have already started to rise, and the expectation is that the increase will accelerate. “The Macquarie Group said the spot price for coking coal was heading from a current level of $US246 ($240) towards $US300 a tonne, and this may be reflected in the next round of quarterly export contracts. The current contract price is $US225,” according to The Australian.

NY’s Cuomo Weighs $2.1 Billion Medicaid Spending Cut, WSJ Says – New York Governor Andrew Cuomo may reduce the state’s spending on Medicaid by more than $2.1 billion, the Wall Street Journal reported, citing sources it did not identify.  When combined with a subsequent reduction in matching federal funds, the spending cut would be as much as $4 billion, the newspaper said.  Cuomo is seeking ways to close a $10 billion budget gap and may ask for additional federal aid, the newspaper said, citing a source it did not identify.

Issuance Plunges 91% From Year Ago as Build America Bonds End – Municipal-debt issuance plunged 91 percent this week from a year earlier after federal initiatives such as the Build America Bonds program ended Dec. 31.  States and local governments are poised to borrow about $628 million through Jan. 7, compared with $7.36 billion in debt sold in the first week of trading last year, according to data compiled by Bloomberg. Since 2004, the first five days of each year’s trading has averaged about $2.84 billion in sales.  Many issuers probably brought forward potential first- quarter 2011 sales to the last three months of 2010 to take advantage of the programs, said Alan Schankel, director of fixed-income research for Janney Montgomery Scott LLC, a Philadelphia-based money-management firm.

Regulators: Completed Foreclosures in Q3 Up 57% from Year Ago – New data from federal regulators show that the nation’s largest banks and thrifts repossessed nearly 187,000 homes during the third quarter of 2010. The number of foreclosures completed during the three-month period is up 14.7 percent from the previous quarter and is 57.5 percent more than a year earlier. The figures provided by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) are based on information collected from nine institutions with the largest mortgage servicing portfolios among national banks and thrifts.   The report covers about 64 percent of all first-lien mortgages in the country, worth $5.8 trillion in outstanding balances. The regulators’ quarterly mortgage performance report shows that new foreclosures initiated by these institutions also rose during the July to September timeframe, before the robo-signing scandal broke. The number of foreclosure starts in Q3 increased to more than 382,000 – 31.2 percent more than in the previous quarter and 3.7 percent more than in the third quarter of 2009.

S&P warns on ‘shadow inventory’ — Standard & Poor’s Ratings Services said Monday that it’s taking longer for the U.S. housing market to absorb foreclosed homes, which means there may be a major drag on prices for a few more years.  The New York metropolitan area may suffer the most from this, the ratings agency also said.  At the end of the third quarter of 2010, the principal balance of foreclosed homes topped $450 billion, which represents about a third of the nonagency residential mortgage-backed securities market, according to S&P managing director Diane Westerback.

Housing Prices Face Potential Of Double Digit Decline In 2011 Residential real estate prices in the US are expected to fall another 10% in 2011 as the supply of distressed properties continues to weigh down the housing market . Fitch Ratings said it is cautious about the outlook for the property market and a substantial stabilization is not likely as key factors, including negative equity , lower loan modification volume, and slightly higher loss severities weigh it down. And a survey of economists by Macro Markets, a financial technology company, suggests that national property prices will not increase until the fourth quarter of 2012. It says that prices in the fourth quarter of 2010 will show a 1.13% drop from a year ago, but will begin to stabilize. Then at the end of 2011, prices are expected to remain 0.17% below where they will be at the end of this year. But by the close of 2012, prices will have begun their long journey to recovery, increasing nearly 2% from 2011, according those surveyed. Robert Shiller , chief economist at MacroMarkets, said less than 3% of those surveyed expected a negative change in 2015.

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