Trade & Economics

After initial excitement, this moment of unity in the capture & killing of Osama bin Ladin registered as a momentary blip in Global Markets as investors worry about the immediate risk of a terrorist backlash and, more generally, the malaise of the US economy. Yet bin Laden’s death has the potential to become a focal point for the country, and for President Barack Obama in particular, if the spirit of unity & partisan cooperation can be translated into broad-based, bipartisan progress on economic issues such as re-employment, infrastructure investments, increased corporate spending of their HUGE profit margins, decreasing the Federal deficit & the National Debt levels that are central to the long-term economic health & prosperity of the nation, and the world.

Unemployment remains stubbornly high.

The Greenback has lost nearly 15% of its value against foreign currencies since the precipitation of the global financial crisis in 2008, and almost 5% since the end of last year. As a result, in 2010, Central Banks around the World became net buyers of Gold reserves for the first time in two decades, adding 87 metric tons of gold in government purchases by countries such as Saudi Arabia, Brazil, Cuba, South Korea, Bolivia, India, Russia and Nigeria, according to World Gold Council data. Interestingly, OPEC which denominates its oil reserves in US Dollars, has recently floated the notion of ditching the Greenback in favor of either the Euro or Gold as an alternative reserve denomination. China, with more than $3 Trn in foreign currency reserves, plans to set up new sovereign funds to invest in precious metals. Russia alone bought 8 tons of gold in 1st Q 2011. As developing countries accelerate purchases, gold may reach $2,000 per ounce this year,

A new study by the International Monetary Fund (IMF) forecasts that the so-called “Age of America” will end in 2016, stating, ‘we are witnessing the end of American economic hegemony in the World.’

China has made significant sacrifices in trying to help African countries lift themselves out of poverty, including the deaths of more than 700 Chinese workers in aid projects, Vice Commerce Minister Fu Ziying told reporters. He said accusations that Beijing’s foreign aid to Africa was targeted at securing resources were “nonsense.” Fu was briefing the press on a report on China’s foreign aid released last week by the State Council Information Office. The report, the first of its kind, said China’s budgeted foreign aid swelled nearly 30% a year since 2004 and totaled 256.2 billion Yuan ($39.2 Bn USD) from 1950 through 2009.

Standard & Poor’s (S&P), one of the big three global ratings agency, on Monday followed the data, too, by downgrading its credit outlook from ‘stable,’ to ‘negative’ for United States sovereign debt – better known as US Treasury notes. The decision by S&P’s sovereign debt analyst, Nicola Swann – known cynically by some traders as the new ‘Black Swann’ – to downgrade US sovereign debt outlook roiled Global Markets, underscoring the growing view that America is a superpower in decline.

The emergence of Brazil, Russia, India, China, and now South Africa to compose the so-called BRICS Summit met in Hainan, China (Apr 14-15, 2011) to discuss global economics, trade cooperation and developments in Japan and Libya. The emergence of this economic bloc could become an alternative voice on the world stage to Western dominated world finance and politics.

The U.S. has not just misplaced its priorities. When the most powerful country ever to inhabit the earth finds it so easy to plunge into the horror of warfare but almost impossible to find adequate work for its people or to properly educate its young, it has lost its way entirely. Nearly 14 million Americans are jobless and the outlook for many of them is grim.

President Obama did what should always be done: namely, he used the sanction of International law by seeking a UN resolution to enforce a No-Fly Zone. By building MULTI-lateral support with all the stakeholders

Continuing coverage on the Rise of State-sponsored Capitalism” href=”http://globaleconomy.foreignpolicyblogs.com/2009/05/09/the-rise-of-state-sponsored-capitalism/” target=”_blank”>I’ve written about frequently here in my Global Markets blog — namely the Chinese state’s spin on capitalism. Though there were many critics early on — and still are in many quarters — who argued that China’s state-managed version of capitalism was unsustainable, it seems the long-term sustainability of so-called ‘State Capitalism‘ has been proven, and is even gathering steam in unlikely places — India, Cuba, Vietnam and the Middle-East to name a few — with great success. It’s a trend that Western financial centers should be attuned to, nor should it be dismissed as the global financial architecture continues to evolve following the global financial crisis.

The World Trade Organization announced the Appellate Body’s ruling on Friday, which essentially bars counties from imposing the “double dipping” duties in retaliation for dumping. The Appellate Body also affirmed that when a state had majority ownership of an enterprise this made it necessarily a “pubic body.” Long story short, While the US is not happy, both […]

Below are some interesting Global Trade related links: PRI’s The World: An Alternative to the Panama Canal – They’ve been talking about making these “dry canals” for years. Doesn’t seem to make a whole lot of sense, but neither did the Panama Canal. NYTimes: Maersk Line Orders 10 Container Ships With Options to Buy More – […]

Long viewed as a safe investment in times of economic turmoil, the US dollar, also known as ‘Greenbacks,’ may be losing its safe haven appeal as it suffers strong downward pressures resulting from rising oil & commodity prices, high Federal budget deficits, soaring national debts and economic uncertainty in the aftermath of several financial crises.

Rising oil & food prices, unrest in the Middle East, declining house prices and a slew of other variables threaten to hamper a fragile US economic recovery.

Deutsche Börse AG, owners of the Frankfurt Stock Exchange, and exchange operator NYSE Euronext have agreed to a merger, creating the world’s largest trading platform as the exchange industry enters a period of global consolidation. The German Bourse will be the parent company, and the newly merged company will be incorporated in the Netherlands.

Under the terms of the deal, Deutsche Börse shareholders will own 60% of the newly merged company, with NYSE shareholders controlling 40%. One Deutsche Börse share will be exchanged for one share of the new company’s stock, while each share of NYSE Euronext will be swapped for 0.47 share of the new company stock.

Investors have largely shrugged off several of these unexpected developments recently, including the sovereign debt crisis in Europe, but the situation in Egypt has the potential to cause more widespread uncertainty in Global Markets, especially if oil and other commodities keep surging or the unrest spreads to more countries in the Middle East.