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Tuesday, July 12, 2011

U.S. trade gap leaps to 3-year high

WASHINGTON — The U.S. trade gap widened sharply in May to its highest level in 31 months as surging oil prices helped push imports to a near record and exports fell slightly from April’s record high.

The trade deficit totalled US$50.2 billion, the highest since October 2008, and well above the consensus estimate of US$44.0 billion from Wall Street analysts surveyed before the report, a Commerce Department report showed on Tuesday.

Imports rose 2.6% to US$225.1 billion, the highest since the record of US$231.6 billion set in July 2008 just before the global financial crisis took a huge toll on global trade.

U.S. stock index futures dipped slightly on the news, while the dollar pared gains against the euro. Bond prices were mostly unchanged.

The increase reflected record imports of capital goods and food, feeds and beverages in a sign of resurgent U.S. demand.

But a jump in oil import prices to US$108.70 per barrel — the highest since August 2008 — also accounted for a large part of the gain.

The oil price rise helped push the U.S. petroleum trade deficit to the highest since October 2008. Imports from the Organization of the Petroleum Exporting Countries were also the highest since October 2008.

The wider-than-expected trade gap could prompt analysts to scale back their estimates of second-quarter economic growth, as imports captured more of stronger U.S. demand.

But economists said trade will still add to growth in the second quarter.

“It won’t have prevented net external trade from making a decent positive contribution to second-quarter real GDP growth,” said Paul Dales, senior U.S. economist at Capital Economics in Toronto.

He said that without the contribution from trade, “the economy might have ground to a complete halt.”

Exports put in another strong showing, but slipped 0.5% from the April record to US$174.9 billion as shipments to the European Union, China and Newly Industrialized Countries all fell. Exports of capital goods were the highest on record.

President Barack Obama in 2010 set a goal of doubling exports in five years to help fuel economic growth and bring down the U.S. unemployment rate, which remains above 9%.

The politically sensitive trade gap with China jumped more than 15% to US$25 billion. U.S. companies imported US$32.8 billion of goods and services from the Asian powerhouse during May, but exported just US$7.8 billion worth to that country.

In worrisome sign for U.S. exports to China in June, recent data out of Beijing shows the country’s imports that month were the weakest in 20 months.

The wider trade gap with China could propel efforts in Congress to pass legislation aimed at pressuring Beijing to raise the value of its yuan currency, which critics charge is artificially weak against the dollar and gives Chinese exporters an unfair advantage.

Thomson Reuters 2011

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Dollar falls to 79.18 yen in London, lowest since March

LONDON, July 12 (AP) - (Kyodo)—The U.S. dollar fell to as low as 79.18 yen at one point Tuesday in London, the lowest level since March 18 when Group of Seven advanced economies jointly intervened in the currency market to stem the yen's surge following a massive earthquake in Japan.

Japanese Finance Minister Yoshihiko Noda told reporters in Tokyo the yen's surge was "wild," and he "intends to closely monitor markets."

The level of 79.18 yen fetched in the morning compares with 79.77-78 yen at 5 p.m. Tuesday in Tokyo and 80.30-40 yen hit at 4 p.m. Monday in London.

The dollar was sold as growing worries over the European sovereign debt crisis boosted the appeal of the Japanese currency against the euro, and yen-buying took upper hand also against the dollar, dealers said.

On March 18, the G-7 leading industrialized nations launched coordinated yen-selling intervention to arrest the yen's surge which took place amid speculation Japanese companies may repatriate their overseas assets into the yen to cover necessary reconstruction costs after the March 11 earthquake and tsunami.

Since then, the dollar has been trading mostly above the 80 yen line.


Italy races to forefront of Europe debt crisis

Italy moved with alarming speed from the fringe of the European Union’s financial crisis to its very centre as efforts to prevent the debt contagion from spreading beyond Greece, Ireland and Portugal failed, even threatening to engulf the United States.

Plunging prices for trading in Italian debt presented Brussels with a nightmare scenario: The potential bailout of the third-largest economy in the euro zone could be unaffordable and could result in the destruction of the common currency.

The spread to Italy is disturbing evidence that even the largest economies, none of which seemed to share any of the worst economic traits of Greece, are not immune from investors’ fears that debt loads are simply becoming too big to be paid off. Waning growth in the Western world is only intensifying the belief that debt defaults may be inevitable, a potentially catastrophic scenario that would slaughter the banks and cut off the credit required to keep companies functioning.

The Globe and Mail


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Montenegro hosts billionaire Nat Rothschild's birthday bash

What does this people have with this spheres??? look the house design at the bottom of the video

The specially decorated infinity pool at the Montenegro marina where Nat Rothschild held his 40th birthday party

The vista is quintessentially Mediterranean – a shimmering blue bay and craggy limestone mountains framed by the swaying fronds of palm trees.

But a picturesque corner of Montenegro was turned into Chelsea-on-Sea this weekend when Eton- and Oxford-educated Nat Rothschild, the billionaire scion of the world's most famous banking dynasty, celebrated his 40th birthday with three days of lavish entertainment.

The £1 million party kicked off on Friday night, when 400 of his friends attended an event billed as a "Disco Soiree" around a newly-built, 215ft-long infinity pool in Porto Montenegro, a marina development which is intended to put this tiny Balkan country on the map for the world's super-yacht owners.

The cost was no problem for the former Bullingdon Club member – his fortune was estimated earlier this year to have exceeded £1 billion, partly due to the soaring price of commodities in which he has invested. It has been speculated that a string of savvy business ventures could make him the richest Rothschild of them all.

Long-legged young British women in short skirts and high heels unfolded from a cavalcade of sleek black Audis and Mercedes, bringing a touch of the King's Road to a jewel of the Balkans that during its heyday in the 1960s was the playground of Princess Margaret, Richard Burton and Elizabeth Taylor.

Many of them were staying in the Hotel Splendid, a luxury hotel overlooking a broad bay in the historic town of Budva, Montenegro's answer to Ibiza.

"This place has become like a bar on Sloane Square overnight," said one resident of Porto Montenegro, which aims to become the 21st century Monte Carlo, with 600 apartments, luxury roof-top penthouses and berths for 630 yachts.

"A month or two ago we'd nicknamed it Porto Moscow, there were so many Russians around. But it's a completely different atmosphere with all the British here. It's a welcome sight – we don't want this place to be taken over by Russians."

Guests came from the worlds of fashion, high finance, politics, commodities and even royalty.

They included Lord Mandelson, the former business secretary, who stayed on Sveti Stefan, a fortified 15th century village on an island just down the coast which has been converted into a five-star boutique resort where suites can cost up to 2,500 euros a night.

He rubbed shoulders with Eddie Jordan, the Formula One driver, who owns an apartment overlooking the marina and the Wimbledon tennis champion Novak Djokovic, who has also just bought a luxury flat and keeps a yacht in the marina.

Tamara Mellon, the British co-founder of the Jimmy Choo luxury shoe brand, and Sasha Volkova, Ukrainian supermodel, were also at the party.

The one royal guest was believed to be King Kgosi Leruo Molotlegi, the leader of the 300,000 strong Royal Bafokeng Nation, a semi-autonomous tribal area in South Africa which is rich in platinum – another contact from Mr Rothschild's interests in minerals.

Egypt's richest family, the Sawiris, were also there – checking out the competition, in the light of the fact that they are building a £1 billion marina and hotel development on the other side of the Bay of Kotor, one of the largest harbours on the Adriatic coast.

The guest list was meant to be secret but was thought to have included the historian Niall Ferguson and his Dutch-Somali wife, Ayaan Hirsi Ali, members of the Guinness and Goldsmith families, Tony Hayward, the former BP boss whose name was tarnished by the Gulf of Mexico oil spill, Roland Rudd, the head of the public relations firm Finsbury and Princess Florence von Preussen, 27, the great-great granddaughter of Kaiser Wilhelm II, who has an "on and off" relationship with Mr Rothschild.

As the sun dipped behind distant mountains, guests were taken by launch to the pier on which the infinity pool is built and handed flutes of Taittinger Champagne and Bellini cocktails.

They then sat down to dinner around the pool, with grilled squid and prawns, mozzarella, focaccia and olives as the antipasti starters, grilled local fish with salad for the main course and panna cotta with wild berries and an almond torte for dessert.

Mr Rothschild and his father, Lord Rothschild, gave speeches, followed by dancing till 5am, with the music provided by DJs and a female singer in a glittering silver dress with a miniature disco ball in her hair. A fleet of six haulage trucks had brought five tonnes of food and wine all the way from the UK.

The whole venue, which until hours before the start of the party had been a frantic building site swarmed over by mostly British construction workers, was cordoned off by thick-set Montenegrin security guards wearing dark suits and ear-pieces.

The party chatter ranged from the latest catwalk fashions to the massive profits to be made from gold mining in Kazakhstan and the perils of doing business in Russia, reflecting the eclectic range of guests.

A jaw-dropping array of super-yachts were moored in what has been acclaimed as "the world's hippest new harbour", most of them registered in tax bolt-holes such as the Cayman Islands, the Grenadines, Gibraltar and the Isle of Man.

One of them, the £60 million White Rose of Drachs, belongs to British multi-millionaire property developer Michael Evans, 75, owner of the Evans Property Group.

For days, private jets swooped from a cloudless sky and landed at the nearby airport of Tivat, along with a privately-owned 737 from the Middle East.

"It has gold fittings and belongs to an Arab sheikh," said Philip Sokovic, 26, who works at the airport. "It's so huge that it's not allowed to stay on the tarmac so they removed it to Dubrovnik. Crazy rich people!"

Among the guests was the former prime minister of Montenegro, Milo Djukanovic, who gave the go-ahead to the development a few years ago after flying over the area in a helicopter with Peter Munk, the billionaire head of the world's largest gold company and the marina's majority investor.

"He may no longer be prime minister, but he is still king around here," said one insider. "The current prime minister is his protégé and would never have been appointed without his blessing."

Mr Munk's huge yacht, Golden Eagle, was one of two dozen docked in the marina, with the largest, the Queen K, belonging to Oleg Deripaska, a Russian aluminium oligarch and close friend of Mr Rothschild's who also has a stake in Porto Montenegro.

Crew members in immaculately pressed white shirts and epaulettes stood to attention at the end of gangplanks as their wealthy owners finished their sundowners and headed for the festivities.

The birthday celebrations continued yesterday with a "hangover lunch" in 95F sunshine around the Mar Lido infinity pool and, for those with the stamina, a sunset party on a pier lined with palm trees, alongside Mr Deripaska's 240ft-long, £80 million gin palace.

"Peter Munk made a joke about what can you give a billionaire who has everything," said one British party-goer. "He said Nat doesn't need anything because the best presents in his life are the success of his businesses."

The three days of no-expense-spared events was an unofficial launch party for Porto Montenegro, which has been built on the dilapidated remains of a Communist-era naval base.

The developers had to clear the waterfront of the rusting hulks of old warships, although they did manage to salvage a submarine, and are thinking of turning it into a cocktail bar.

Touted by its backers as "Europe's fastest-growing nautical destination", it lies at the heart of some of the Mediterranean's most dramatic and unspoilt coastal scenery.

A golf course and an international school will be built and a nearby commercial shipyard will be turned into a maintenance and repainting dock for super-yachts, some of which reach 300ft in length.

"This is Montenegro's biggest development," said Mark Harrison, the British lawyer for the project. "If Montenegro is going to take off, it will be through tourism, not industry. We're offering berths for dramatically less than the South of France.

"This will be the Mediterranean's biggest mega-yacht facility and it will put the country on the map."

Maja Vujaskovic, public relations manager for Porto Montenegro, said: "We are effectively building a whole town from scratch. The idea is that people live here permanently – it's not meant to be a holiday resort, but a living, breathing community."

But with penthouse suites selling for as much as €3 million, it will be a "community" only within reach of the super-rich metals magnates and hedge fund managers who celebrated Mr Rothschild's birthday in such style.

The Telegraph
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Fears trigger equities exodus

REUTERS/John Kolesidis

Sovereign debt worries on both sides of the Atlantic linked global markets in the throes of risk aversion Monday, sending money fleeing from equities and commodities and into the usual safe havens.

The glare of the investing community abruptly locked onto Italy’s monumental debt load with rising concern that contagion could fell the eurozone’s third-largest economy.

The fear of Greek default, considered an inevitability by many economists, also heightened Monday with European officials agreeing to involve the country’s private-sector creditors in a second bailout package, an arrangement that ratings agencies warn would technically constitute default.

The announcement came after eight hours of talks between the eurozone’s finance ministers on how to control the debt crisis.

“There will be a private-sector involvement,” said Eurogroup president Jean-Claude Juncker. “This is a decision that has been taken by the European Council. Talks will go on in the coming days.”

In the United States, meanwhile, the ongoing debt ceiling impasse stoked fears of a credit event in early August, an outcome thought both unlikely and catastrophic.

Any of which could provide the catalyst for a major economic slide.

“You don’t know which banks are greatly exposed to the debt problem, and you could get into the kind of credit freeze that was such a problem after Lehman’s bankruptcy,” said Sal Guatieri, senior economist at BMO Capital Markets.

Fresh off a brutal sell-off last week now dubbed “Black Friday” by Italian media, the country’s stock and bond markets continue to get drawn into the region’s sovereign debt crisis.

Yields on Italian bonds rose to 5.57% Monday, the highest level in more than a decade, opening up a spread of almost three percentage points above the equivalent German asset.

The country’s vulnerability is found in its ¤1.6-trillion pile of sovereign debt, a level of borrowing exceeded only by Japan and the United States.

Italy’s debt amounts to 120% of its GDP and dwarfs the combined borrowing of all the other countries already engulfed by the crisis.

“Greece, Ireland and Portugal, you can make the case that it’s a containable problem,” said Alex Bellefleur, a financial economist at Brockhouse Cooper. “The Italian economy is very large, the Italian debt market is enormous and it’s probably too big to bail out.”

A big chunk of Italy’s debt — about ¤200-billion — is held by the country’s banks, amplifying the internal risk of an Italian credit event.

“The correlation between sovereign and bank credit default swaps is explosive,” Lorenzo Bini Smaghi, a policymaker at the European Central Bank, said at a conference Monday.

At the same time, he dismissed the notion of an Italian default. “Italy will never default, it is a rich country that is clearly able to pay back its debts,” Mr. Smaghi said.

That same certainty was once offered with regards to Greece’s finances. But some version of Greek default is reportedly being discussed as part of a second bailout package.

“Greece in my opinion is insolvent and needs to default, and we’re moving towards that realization in the market,” Mr. Bellefleur said.


The All Christians Fellowship Mission church was bombed in Nigeria Sunday, killing 3 and wounding 7. Officials say their first priority is tending to the victims.

According to Reuters, this is not the first time the Christian community has been targeted for attack. So far, a reported 150 have died in similar incidents this year. Police are blaming a militant Islamist group. The question is: with a death toll of 150 and counting, what are authorities doing to stop further attacks?

The Blaze

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Apocalypse, Wow: Disaster Ready Homes (to hell with style..)

When the Four Horsemen of the Apocalypse approach, to where will you retreat? If this seems like a relevant question, it’s likely you’re the type who, for reasons too complex to get into here, enjoys imagining disaster scenarios. But it’s only fun if you survive the apocalypse, and that requires a well-fortified home base.

When it comes to major emergencies, conventional houses’ traditional nods toward protection—like fences, security alarm systems, and gated communities—are for chumps. If you plan to survive a wide-scale disaster, you’re going to need a shelter fit for holding off the beasts and roaming marauders, not to mention the coming of hell and/or high water.

It’s impossible for any one structure to be impenetrable to every potential crisis, so emergency-minded homebuilders and buyers basically have to pick some favorites and hope they choose correctly.

The best disaster-ready homes are the ones that cover as many dangerous scenarios as possible and allow for ongoing survival, like self-sufficient structures capable of generating their own power and growing or catching food. On the other end of things, bomb shelters and panic rooms are limited survival plans in that you must be able to return to a livable outside world. If that’s not an option, once you exhaust the supplies, these spaces become literal dead ends. With that thought to warm your heart, click ahead to see houses with differing styles of disaster preparedness.



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Greece set to default on massive debt burden, European leaders concede

Greece debt crisis: protests

European leaders bowed to the inevitable and conceded that Greece is likely to default on its massive debt burden, which would be a first among the 17 countries using the euro.

They also abruptly shifted tack in the eurozone debt crisis by raising the possibility of using the eurozone's bailout fund to buy back Greek debt on the markets, meaning sizeable losses for Greece's private investors and reduced debt levels for Athens.

Following 12 hours of fraught negotiations in Brussels haunted by the risks of contagion in the eurozone spreading to Italy, now being targeted by the financial markets for the first time in the 18-month crisis, the 17 governments of the eurozone pointedly failed to rule out a sovereign debt default by Greece.

A statement said that, at the meeting, the European Central Bank "confirmed its position that a credit event or selective default should be avoided". There was no declaration of governments' support for the ECB position. Jean-Claude Juncker of Luxembourg, president of the Eurogroup, and Olli Rehn, EU commissioner for monetary affairs, both declined to offer one.

"That does not mean that the Eurogroup as such would do everything to provoke a credit event," quipped Juncker.

As recently as last week, eurozone ministers stressed the need to avoid default in Greece, indicating the rapid shifts under way in an escalating crisis.

Deep-seated divisions remained between the wealthy northern creditor governments and southern Europe, with market pressures pushing up Italian and Spanish borrowing costs and appearing to vindicate ECB warnings of the risks of contagion from Greece.

Italian borrowing costs hit 5.7%, their highest levels in more than a decade, while the yields, or borrowing rates, on Spanish government bonds reached 6% – the highest level since the creation of the euro.

Dealers reported a race to "safe havens" and gold priced in euros and sterling reached record levels of €1,110.48 and £979.89 an ounce in early trading before falling back, while the euro hit a record low against the Swiss franc – a safe-haven currency. Wall Street was also caught up in the anxiety, with US stocks falling 1% in early trading, while the FTSE 100 was also 1% lower.

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Obama: I Will Refuse to Sign Any Short-Term Deficit Deal

President Barack Obama

President Barack Obama on Monday increased pressure on Republican lawmakers to make concessions for a deal to avoid an Aug. 2 debt default and said both sides must "pull off the Band-aid" and make sacrifices.

"If not now, when?" Obama said.

Obama said he would refuse to consider a short-term stop gap measure.

He told a White House news conference he would meet every single day with top U.S. lawmakers until an agreement is sealed to avoid defaulting on the national debt with the clock ticking to an Aug. 2 deadline.

He resumed talks at 2 p.m. on Monday with them to try again to break a stalemate over reducing the country's $1.4 trillion deficit and clear the way for a vote to increase the $14.3 trillion debt ceiling.

The Treasury Department has warned that it will run out of money to cover the country's bills if Congress does not raise the debt limit by Aug. 2.

Failure to do so could push the United States back into recession, send shock waves through global markets and threaten the dollar's reserve status.

Obama is locked in a politically charged debate with House Speaker John Boehner, the top U.S. Republican, over a large deal that Obama wants, a $4 trillion, 10-year deficit reduction proposal.

The deal would increase taxes—to the chagrin of Republicans—and reform sacred-cow entitlement programs like Medicare and Medicaid and cut government spending, which concerns Democrats.

It was unclear whether Obama would be able to persuade Republicans to agree to a larger deal after Boehner balked over the weekend, meaning the two sides may have to negotiate a smaller, $2 trillion deal.



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Putin brands US as 'hooligans' for printing money

Russian Prime Minister Vladimir Putin

Russian Prime Minister Vladimir Putin accused the US of hooliganism on Monday over the US government's efforts to ease its financial problems by injecting hundreds of billions of dollars into the economy.

"Thank God, or unfortunately, we do not print a reserve currency but what are they doing? They are behaving like hooligans, switching on the printing press and tossing them around the whole world, forgetting their main obligations," Putin told a meeting of economic experts at the Russian Academy of Sciences.

Putin's comments came in the wake of the completion of the US' quantitative easing (QE) 2 program on June 30, in which the Federal Reserve bought $600 billion worth of its Treasury bonds. The Fed's first round of QE, which ended in March last year, amounted to less than half the size of QE2.

The Russian authorities have said they would like to see a basket of currencies including the ruble replacing the dollar as the main reserve currency, although most analysts have said a more realistic target for Russia would be if the ruble became a regional reserve currency for the CIS.

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The video congress does not want you to see

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