Top Economist Says America Could Plunge into Recession
TIMES ONLINE: Losses arising from America’s housing recession could triple over the next few years and they represent the greatest threat to growth in the United States, one of the world’s leading economists has told The Times.

Robert Shiller, Professor of Economics at Yale University, predicted that there was a very real possibility that the US would be plunged into a Japan-style slump, with house prices declining for years.

Professor Shiller, co-founder of the respected S&P Case/Shiller house-price index, said: “American real estate values have already lost around $1 trillion [£503 billion]. That could easily increase threefold over the next few years. This is a much bigger issue than sub-prime. We are talking trillions of dollars’ worth of losses.” Top economist says America could plunge into recession >>> By Suzy Jagger in New York

Mark Alexander (Paperback)
Mark Alexander (Hardback)

Brown Warns of Bleak Year for the Economy
THE OBSERVER:

· Prepare for turbulence to come, says PM
· Credit crunch 'our biggest challenge'

Gordon Brown today issues a bleak assessment of the world economy as he braces Britain for a year of belt tightening in the wake of the credit crunch.

In a strong warning, which sets the backdrop for a campaign to revive his premiership, Brown tells Britain to prepare for 'global financial turbulence' in 2008. 'Our strong economy is the foundation,' Brown writes in his new year message. 'With unbending determination in 2008, we will steer a course of stability through global financial turbulence. The global credit problem that started in America is now the most immediate challenge for every economy.'

Brown's sober analysis comes in the wake of the autumn credit crunch that caused the first run on a British bank in more than a century after the Bank of England bailed out Northern Rock. The sight of thousands of depositors queuing outside branches across Britain to withdraw their savings was one of the factors that contributed to the dramatic fall in Brown's ratings in the autumn. Grim Brown warns of a bleak year for Britain >>> By Nicholas Watt, political editor

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Mark Alexander (Hardback)

1929 May Yet Look Like a ‘Walk in the Park’
THE TELEGRAPH: As central banks continue to splash their cash over the system, so far to little effect, Ambrose Evans-Pritchard argues that things risk spiralling out of their control

Twenty billion dollars here, $20bn there, and a lush half-trillion from the European Central Bank at give-away rates for Christmas. Buckets of liquidity are being splashed over the North Atlantic banking system, so far with meagre or fleeting effects.

As the credit paralysis stretches through its fifth month, a chorus of economists has begun to warn that the world's central banks are fighting the wrong war, and perhaps risk a policy error of epochal proportions. Crisis may make 1929 look a 'walk in the park' >>>

Mark Alexander (Paperback)
Mark Alexander (Hardback)

£84m online spree
THE TELEGRAPH: UK consumers spent an estimated £84m online on Christmas Day, heralding a new trend that will pile further pressure on traditional high-street retailers.

About 4.4m Britons - equivalent to one in 13 of the population - bought goods over the internet on December 25, a 269pc increase on the previous year, according to IMRG, the e-commerce industry body.

Dixons.co.uk, the electricals website, reported a doubling of visitors to its website on Christmas Day compared with last year.

The trend for online shopping on Christmas Day will have diverted yet more money away from traditional bricks and mortar retailers, most of whom are hoping for a post-Christmas surge after a sluggish start to the festive season.

Retail Decisions, the online security company, estimates £440m was spent over the internet between Christmas Eve and Boxing Day, up 41pc on last year. Christmas Day sees £84m online spree >>> By James Hall

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Mark Alexander (Hardback)

Pound Sterling Drops Its Value After Major Sell-Off
THE TELEGRAPH: The pound has slumped to its lowest level in 20 months, after a "shocking" raft of figures revealed how deeply reliant the UK has become on debt.

Britain's current account has recorded its worst deficit since the late 1980s, making Britain's national balance sheet worse than the United States' for the first time since Nigel Lawson was Chancellor of the Exchequer.

Figures published by the Office for National Statistics caused a major sell-off of the pound, as experts warned that the UK currency would have to fall in value to bring the current account back into line. Sterling dropped to 98.9 on the Bank of England's comprehensive trade-weighted index, which measures it against a basket of other currencies. This is the lowest level since April 2006.

It also fell more than two cents against the dollar to $1.9813 and neared an all-time low against the euro, with the single currency worth 72.39 pence. Debt fears push sterling to 20 month low >>> By Edmund Conway, Economics Editor

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Mark Alexander (Hardback)

Americans in Free Fall: Living on the 'Never Never'
Watch BBC video: Americans owe $14 trillion
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Mark Alexander (Hardback)

The End of Globalization?
SPIEGELONLINE INTERNATIONAL: Great political change often begins with the smallest of doubts. Such a doubt is beginning to make itself heard in the US presidential campaign. Free trade, Hillary Clinton is saying, may not be so great after all. Could it signal the beginning of the end for globalization?

It was the Chinese philosopher Lao Tzu who said, "A journey of a thousand miles begins with a single step." The same can be said of political movements. In their embryonic state, they are often little more than doubts tugging at the corners of a political heart. The Cold War provides a ready example: Growing skepticism with the policy of confrontation eventually gave rise to détente.

China today also owes its very existence to doubts. Communist Party leader Deng Xiaoping had stopped believing in the power of Mao and Marx to build a viable state. Even the British settlers in the New World would still be British today if they had not had their doubts about the good intentions of the mother country. Doubts turned into anger, anger led to war, and in the end the country we know today as the United States was born.

A similar sense of doubt has now entered the US presidential campaign -- and it is one that could lead to change of historical proportions. Democratic presidential candidate Hillary Clinton has distanced herself from the idea of free trade, a philosophy which has shaped America's worldview since the end of World War II. The theory holds that trade between nations automatically increases the wealth of all participants, and that any form of trade is better than no trade at all. Every American president since Harry S. Truman has spent a good deal of his time in office eliminating customs restrictions and barriers to trade. The End of Globalization? >>> By Gabor Steingart*

* Gabor Steingart, 45, has been a journalist for SPIEGEL since 1990. He is currently reporting from SPIEGEL's Washington, D.C. bureau. His best-selling book "The War for Wealth: Why Globalization is Bleeding the West of Its Prosperity" will be published in the United States in April 2008 by McGraw-Hill.

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Jerome R. Corsi: ‘North American Union to Replace USA?
HUMANEVENTS.COM: President Bush is pursuing a globalist agenda to create a North American Union, effectively erasing our borders with both Mexico and Canada. This was the hidden agenda behind the Bush administration's true open borders policy.

Secretly, the Bush administration is pursuing a policy to expand NAFTA politically, setting the stage for a North American Union designed to encompass the U.S., Canada, and Mexico. What the Bush administration truly wants is the free, unimpeded movement of people across open borders with Mexico and Canada.

President Bush intends to abrogate U.S. sovereignty to the North American Union, a new economic and political entity which the President is quietly forming, much as the European Union has formed.

The blueprint President Bush is following was laid out in a 2005 report entitled "Building a North American Community" published by the left-of-center Council on Foreign Relations (CFR). The CFR report connects the dots between the Bush administration's actual policy on illegal immigration and the drive to create the North American Union:

At their meeting in Waco, Texas, at the end of March 2005, U.S. President George W. Bush, Mexican President Vicente Fox, and Canadian Prime Minister Paul Martin committed their governments to a path of cooperation and joint action. We welcome this important development and offer this report to add urgency and specific recommendations to strengthen their efforts. North American Union to Replace USA? >>> By Jerome R. Corsi

Mark Alexander

Simon Heffer: ‘Like Sarkozy, Gordon Brown Must Face Reality’
THE TELEGRAPH: We accidental aficionados of the oratory of Gordon Brown know there are certain constants in his rhetorical range. One is his boasts, during most Budget and conference speeches, about how Britain's economic performance exceeds that of our European partners.

There has, obviously, been less of that lately, not just because Mr Brown no longer makes Budget speeches - that is now the province of the riveting and charismatic Alistair Darling - but because, as our economy heads for the drain, comparisons are increasingly odorous.

With that in mind, I went to Paris last week to see how France is changing, seven months into the rule of Nicolas Sarkozy. There is good news and bad news.

The good news is that the president has faced down some trade unions, and an outbreak of savagery in the gruesome northern suburbs of the capital has subsided. The bad news, according to close and seasoned observers of the French political scene, is that both respites may well be only temporary.

We might think this only affects us if we are planning a weekend in Paris, and have to wait two hours in the rain for a taxi at Gare du Nord. We would be wrong.

President Sarkozy is trying to bring France face-to-face with some economic and social realities. He is doing this just as we seem to be running away from them. La méthode Sarko may have its dangers, but, if it works, it will put France on a footing that will make it one of the most formidable forces in Europe. Like Sarkozy, Gordon Brown must face reality >>> By Simon Heffer

Mark Alexander

Sporadic Postings
I should like to make my visitors and readers aware that, at the moment, I am able to post far less frequently than I usually do. This, for two reasons: First, I am experiencing computer problems, computer hardware problems which are currently being fixed; and two, with the run-up to Christmas, I have much to do, many preparations for the festive season.

I should like to ask you, therefore, to bear with me. Soon, I shall be back posting with my usually frequency.

Many thanks

Mark

Bonus Time on Wall Street


THE TELEGRAPH:
Goldman Sachs enjoys bonus bonanza By Philip Aldrick

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Islamic Investment Instruments
THE NEWS: KARACHI: Many countries in the world are promoting Islamic finance, including Islamic investment instruments (3Is), to cater to the growing demand for Islamic modes of financing and banking.

“Introducing innovative Islamic products in the financial sector has become necessary, as there is increasing demand for Shariah-compliant products, especially the 3Is, in both developed and developing countries,” said Joseph Tan, an economist at Global Research, Standard Chartered Bank.

There is now growing demand for the 3Is in the United States, the United Kingdom, Malaysia, Singapore, Pakistan, many of the Middle Eastern countries and India for the 3Is. The current world market for Islamic financial products is estimated around 300 billion US dollars

Experts say Islamic investment products are Shariah compliant. The 3Is are attractive for investors who want a handsome return on their investment or want to acquire loans in cash or kind without the string of Riba (interest) attached to transactions.

Riba has no place in Islamic banking and other Islamic modes of financing. With a Muslim population of almost 95 per cent, according to the 1998 census, Pakistan introduced Islamic Banking Policy in December 2001. In Pakistan, the banking spread of Islamic banks is higher than that of the conventional banks. The banking spread in conventional banking on an average is 7.2 per cent, and in Islamic banking it is 8.7 per cent. Islamic Investment Instruments >>> By Salman Siddiqui

Mark Alexander (Hardback)
Mark Alexander (Paperback)

Warren Buffet at Berkshire Hathaway Annual Meeting 2007 CNN


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Tom Brokaw Interviews Warren Buffett


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Mark Alexander (Paperback)

Glenn Beck: The US Economy


Empire of Debt By William Bonner and Addison Wiggin

Mark Alexander (Hardback)
Mark Alexander (Paperback)

America Headed for First Recession in Sixteen Years
THE TELEGRAPH: Merrill Lynch says it has moved "beyond decoupling" to "rebalancing", changing the terminology but leaving the message unchanged: America's headed for its first recession in 16 years but the rest of the world, fingers crossed, will be just fine.

According to Merrill Lynch, the decoupling thesis has already been proved. Global growth outside the US actually accelerated this year from 5.9pc to 6pc, even as the US decelerated from 2.9pc to 2.2pc. America sneezed, but the rest of the world avoided catching a cold.

Rebalancing is more about where the growth will be within individual economies, with Merrill predicting that debt-strained US consumers (and to a lesser extent Britain's too) will rein in spending at the same time as the outlook for domestic demand growth in the rest of the world remains buoyant. That creates a challenge for investors, because it's not simply a case of America bad, rest of the world good. Will the world catch the US economic cold? >>> By Tom Stevenson

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Mark Alexander (Paperback)

Incompetence at the Fed, or What? Dollar Could Come Under Even More Pressure if Gulf States Unpeg Their Currencies
TIMESONLINE: Foreign exchange markets are on alert this week for the embattled dollar to face a further, severe sell-off after key talks between the Middle East’s Gulf states that could lead to them scrapping their currencies’ pegs to the greenback.

Rulers of the six nations of the Gulf Cooperation Council (GCC) meet today and tomorrow in the Qatari capital of Doha amid significant pressures to sever their currency ties to the falling dollar, which is fuelling record inflation in their countries.

Officially, the GCC states have insisted that the key currency issue is not on the agenda for the rulers’ summit talks. However, there is intense speculation that mounting economic and social strains inflicted by the currency pegs could see them scrapped, or the Gulf currencies revalued, either at the meetings or within weeks of them.

Any move by five of the six GCC countries to follow a lead set by Kuwait in May and abandon their long-standing dollar pegs would add to already severe stress on the American currency, whose overall value on its broad trade-weighted index has plunged by nearly 12 per cent over the past two years, raising inflationary anxieties for the United States. Dollar faces new sell-off if Gulf states end greenback pegs >>> By Gary Duncan

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Mark Alexander (Paperback)

Cut the Interest Rate, Says Tesco
TIMESONLINE: Tesco has turned up the pressure on the Bank of England to cut interest rates tomorrow in an effort to revive consumer confidence in the run-up to Christmas and the new year.

Dismissing mounting fears about food price inflation as “hype”, Britain’s biggest supermarket said yesterday that it was time for the Bank to send worried shoppers a signal by bringing down the cost of borrowing.

Andrew Higginson, Tesco’s group finance director, said: “The problem is not inflation but consumer sentiment. It’s important that [the Bank of England] starts to show interest rates are going to come down.”

His comments came only a day after the British Retail Consortium had said that like-for-like sales growth across the high street was 1.2 per cent in November, well below the average for the past two years. Tesco demands a cut in interest rates to raise Christmas cheer on the high street >>> By Steve Hawkes

TIMESONLINE:
Rate cut urged to end the gloom By David Smith

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Mark Alexander (Paperback)

Frank Gaffney Jr: Shariah’s Trojan Horse
TOWNHALL.COM: Suddenly, a new national debate is beginning about the national security, economic and other implications of Persian Gulf potentates using their petrodollars to buy up strategic American assets. Most recently, the Emir of Dubai’s purchase at fire-sale prices of 4.9 percent of the largest U.S. bank, Citigroup, has caused a level of unease not seen since he tried to buy his way into a large number of this country’s port facilities.

Almost completely unremarked thus far has been a parallel – and in many ways far more insidious – effort to penetrate, influence and dominate America’s capital markets: so-called “Shariah finance.” Some estimates suggest that there are approaching $1 trillion now being invested around the world under this rubric. If present trends continue, all other things being equal, such funds may grow to many times that amount within a few years.

Shariah is, of course, the term used by adherents to the totalitarian ideology practiced by the Saudi Wahhabis, the Iranian mullahs and the Taliban to describe the all-encompassing theocratic code they use to justify repressive rule at home and to extend their dominance elsewhere. While it is often depicted by its promoters as Koranic in character, in fact, it is largely man-made, the product of dictates and rulings by caliphs and scholars over many centuries.

For non-Muslims, Shariah is best known for its sanction for the brutalization of women, homosexuals and Jews. Beheadings, amputations, flagellation and stoning are among the prescribed punishments for those who transgress this barbaric code, punishments plucked from primitive tribal practices in the Arabian deserts dating back to medieval times. Shariah’s Trojan Horse >>> By Frank J. Gaffney Jr.

Frank Gaffney Jr. is the founder and president of the Center for Security Policy and author of War Footing: 10 Steps America Must Take to Prevail in the War for the Free World (Hardcover)

Mark Alexander (Hardback)
Mark Alexander (Paperback)

House Prices in UK Will Plummet, Says Economist
DAILY MAIL: The housing market is on the brink of a record slump, one of the country's leading experts warned.

Morgan Stanley's chief UK economist David Miles warned that prices will drop 10 per cent next year.

That would be the biggest full-year decline since records began in 1969.

A drop on that scale could plunge thousands of people into negative equity and recall the worst days of the recession of the 1990s.

Mr Miles, who has advised Gordon Brown on mortgages, said the pain would not end there, as prices could continue to fall in 2009. House prices 'will plummet by 10pc over the next year', says banking chief economist >>> By Sam Fleming

Mark Alexander

If Islam Won’t Get Us One Way, It will Get Us Another: Profitable Islamic Investment Strategies Prove Irresistible to Financiers
MEDILL REPORTS – CHICAGO: Islamic investment strategies are proving they’re worth a second look from Muslim and non-Muslim investors alike.

Amana Trust Income, a mutual fund managed by Bellingham, Wash.-based Amana Mutual Funds Trust in accordance with Islamic Shariah law, has increased 13.9 percent year-to-date, compared with a 5.7-percent return for the S&P 500.

It’s a star performance in a rocky investment environment, but Amana Trust Income is hardly extraordinary among Islamic funds. The Dow Jones Islamic Index is up 17.1 percent year-to-date.

So what’s the higher power behind the relative success of Islamic funds?

“These are just better stocks and healthier companies,” said William Redman, managing director and treasurer for Connecticut-based Shariah Capital Inc., which creates Shariah compliant financial products.

In fact, Shariah-compliant does not refer to the nationality of a company, but rather its way of doing business. For example, Brooklyn Center, Minn.-based Caribou Coffee conforms to Shariah Islamic law.

“The threshold for debt is lower,” Redman said. Shariah Capital chooses companies with low debt, low accounts receivable and low cash holdings, in accord with the principles prescribed by the Quran.

Shariah law also forbids the collection or payment of Riba, or excessive interest, as well as investment in companies producing goods or services like alcohol and gambling, that are off-limits to Muslims.

While the rules governing Islamic finance are thousands of years old, very recent changes have led to new opportunities. Have faith: Islamic investing offers strong returns >>> By Alysia Patterson

Mark Alexander

The Credit Crunch Could Crush the Euro
Photo courtesy of Reuters
THE TELEGRAPH: The credit crunch is hammering the US, which now faces a likely recession. Things don’t look great for the UK either; here growth could plunge to 1 per cent next year.

There is a near-consensus among economists, in fact, that the Anglo-Saxon world created this credit crunch and will likely bear the most pain.

The eurozone, it is widely assumed, has been less affected by sub-prime. Most investment banks predict the 13-country region will out-perform the UK in 2008.

A slew of recent data tells me we should now question that assumption. If I’m right, and the eurozone does a face serious drop, us Brits would be foolish to grin. We like to revel in Continental misfortunes, but the single currency area matters hugely – accounting for three-fifths of UK trade, more than four times as much as the States.

The reason the eurozone now worries me is the emerging picture of sharply rising consumer prices on the one hand, and falling output on the other. Just like the Bank of England, the European Central Bank will on Thursday try to set monetary policy not only to deal with inflation, but also bolster growth.

Eurozone base rates are likely to be held at 4 per cent – for the sixth month in a row. Most observers think if they do shift this week, the only possible move is up.

That’s because, despite the credit crunch, the ECB’s rhetoric has remained very hawkish. But, in reality, eurozone policy makers now face a classic growth-inflation dilemma – one they share with other Western central banks.

The ECB’s predicament is made worse, though, by the euro/dollar exchange rate, and the single currency’s structural flaws. These two unique aspects of the region’s quandary are why its prospects are more gloomy than assumed. The credit crunch could crush the euro >>> By Liam Halligan, Economics Editor

Mark Alexander

Sarkozy to Close ‘Big Deals’ in Algeria
BBC: French President Nicolas Sarkozy is expected to finalise a series of big business deals on a visit to Algeria.

The contracts include billion-dollar investments in the Algerian oil and gas business by the French energy companies Total and Gaz de France.

France is already the biggest investor in Algeria outside the energy sector.

But it is a controversial visit, given Mr Sarkozy's refusal to apologise for the deaths of thousands of Algerians during French colonial rule.

Deep anger

Mr Sarkozy will be travelling with a large delegation of businessmen to Algiers, where they are expected to seal $4bn-worth of deals vital to both economies. Tensions dog Sarkozy in Algeria >>>

Mark Alexander

’Fresh & Easy’
Photo courtesy of the BBC
BBC: Tesco, the UK's largest retailer, is planning to open a 1,000-strong chain of discount stores in the US, pitting it against rival retail giant Wal-Mart.

The supermarket has just opened 15 of its Fresh & Easy stores in Las Vegas, Los Angeles, San Diego and Phoenix.

It aims to open a further 200 outlets by 2009 with plans in place to expand the network.

The US retail market is the world's most competitive and has proved a tough nut to crack for many UK retailers.

Ready meals

The company is planning to open a second distribution centre in northern California.

Like the first one, located near Los Angeles, the centre could serve up to 500 stores.

"We want the stores to be no more than two miles apart so no one has to travel more than a mile to get to a Fresh & Easy," said Fresh & Easy Chief Executive Tim Mason. Tesco plans US stores expansion >>>

Mark Alexander

Geschenkt gibt's nichts
DIE PRESSE: Frankreich. Die Zeiten des großzügigen Wohlfahrtsstaates sind auch an der Seine vorbei.

PARIS. „Die Franzosen sind nicht so einfältig, von mir zu erwarten, dass ich wie ein Weihnachtsmann Geschenke verteile“, antwortete Präsident Sarkozy am Donnerstagabend bei einem Fernsehinterview zum Thema Kaufkraft, als ihn eine Journalistin fragte, was er denn konkret anzubieten habe, um das Lebensniveau zu verbessern. Deutlicher konnte er seinen Landsleuten nicht sagen, dass mit ihm die Zeiten des großzügigen Wohlfahrtsstaates in Frankreich vorbei sind. Er erinnerte seine Wähler an den Slogan seiner Kampagne: „Wer mehr verdienen will, soll mehr arbeiten.“ Seine Aufgabe bestehe darin, alle Hindernisse zu beseitigen, die es bisher erschweren, Mehrarbeit zu verrichten.

Da der defizitäre Staat nichts zu verteilen hat, und damit auch der soziale Spielraum der Regierung sehr eng geworden ist, spielt Sarkozy den Ball an die Wirtschaft und die einzelnen Beschäftigten. Die meisten seiner Vorschläge basieren auf Freiwilligkeit. So möchte er, dass die Unternehmen die durch geleistete Überzeit akkumulierten Kompensationstage ihrem Personal in Geld ausbezahlen. Das solle auch der Staat machen, beispielsweise im Gesundheitswesen. Sarkozy: Geschenkt gibt's nichts >>> Von Rudolf Balmer

Mark Alexander

The Dollar Nosedive
SPIEGELONLINE INTERNATIONAL: The ailing US economy seems to be driving the exchange rate of the dollar inexorably downward, with serious consequences for the global economy. Politicians and central bankers are looking on helplessly as the economic outlook worsens by the day and European companies rack up huge losses.

It costs about four cents to produce a one-dollar bill -- a pittance, compared to the greenback's influence on the world's economy.

The exchange rate of the dollar can boost the fortunes of companies and entire economies -- or plunge them into crisis. Its rate against the euro fluctuates by a few hundredths of a cent each day. But in the past five years that fluctuation has more often than not taken the US currency on a downward trajectory, causing consternation -- and now despair -- among people around the world.

Last Thursday, Thomas Enders, the CEO of Airbus, gave a speech to employees in building 261 at the consortium's production complex in Hamburg. He was there to tell them that a pain threshold had reached. The graph he had projected on the wall revealed the horrifying progression of the dollar over time. The US currency has lost 13 percent of its value against the euro since the beginning of the year. Conversely, the euro has risen in value, and for a short time last Friday it even approached the symbolic $1.50 threshold.

According to Enders, the rate at which the US currency is falling makes "reasonable processes of adjustment" a virtual impossibility. Every cent the dollar drops against the euro costs Airbus €100 million. This has even the normally optimistic Enders alarmed. "It's life-threatening," he told his audience. Why America's Currency Is the World's Problem >>>

Mark Alexander

Rate Cut to Head Off Disaster?
THE SUNDAY TIMES: PRESSURE is growing on the Bank of England to cut interest rates this week as gloom over the economy intensifies.

Two of Britain’s best-known economists, Patrick Minford and Tim Congdon, say the Bank’s monetary policy committee (MPC) needs to slash rates to get the banking system working and head off a sharp downturn.

Minford, a professor at the Cardiff Business School and former adviser to Margaret Thatcher and the Treasury, called for an urgent 0.75 percentage point cut. He said the bank was being “irresponsible” in not acting already to “stabilise a fast-deteriorating situation” brought about by the sharp rise in money-market interest rates since summer.

Three-month Libor (London interbank offered rate), at which banks lend to each other, hit nearly 6.6% last week. “I regard the Bank’s behaviour as highly irresponsible, as I regard its behaviour in August and September as irresponsible and neglectful of a century of monetary teaching,” he said. “It is time for some sense to prevail.” Rate cut urged to end the gloom >>>

Mark Alexander

Bourse Rebounds on US Hopes of Rate Cut
THE SYDNEY MORNING HERALD: AUSTRALIAN stocks turned around a poor start to rise 1.4 per cent after the US Federal Reserve chairman, Ben Bernanke, reignited hopes for another US rate cut by Christmas.

The domestic rally would have been stronger if National Australia Bank hadn't slipped 2 per cent as brokers downgraded the stock after its $900 million US acquisition.

Dr Bernanke, in a speech delivered this morning Australian time, said renewed turbulence in world financial markets had partially reversed improvements that occurred in September and October. >>>

Mark Alexander

„Subprime-Krise stürzt USA in die Rezession“
DIE PRESSE: Die Kreditkrise zieht weite Kreise: Mindestens 400 Mrd. Dollar sind „faul“. Nun muss auch EZB-Chef Trichet auf die Krise reagieren.

Frankfurt (ju.). Die Subprime-Krise, die das Wachstum in den Industriestaaten abzuwürgen droht, ist viel tiefer als bisher angenommen. „Nach dem, was auf dem Tisch liegt, sind mindestens 400 Milliarden Dollar betroffen sind“, sagte der Hans-Michael Schania, Gründer der auf strukturierte Finanzprodukte spezialisierten Wiener Aurelius Capital Management, am Rande einer von Aurelius und der deutschen Deka-Bank gemeinsam veranstalteten Subprime-Konferenz in Frankfurt.

Ein Großteil dieser „faulen“ Finanzierungen ist noch nicht abgeschrieben – und so lange das nicht geschehen ist, werden auch die Finanzmärkte beben, meint Standard & Poors-Experte Ian Bell. Die Krise werde sich also tief ins kommende Jahr ziehen – und möglicherweise noch ausweiten. Denn nach der „Subprime“-Krise drohen nun Probleme bei zu leichtfertig vergebenen Konsumkrediten, bei Kreditkarten und auch bei einigen Unternehmensanleihen.

Die Zentralbanken haben in dieser Situation keine Wahl, als aggressiv zu intervenieren, meint George Magnus, Senior Economic Adviser bei UBS. Die amerikanische Zentralbank werde deshalb wohl noch mehrere Zinssenkungen durchführen, eine davon noch heuer. Im kommenden Jahr werden aber wahrscheinlich auch die EZB und die britische Notenbank ihre Zinsen zurücknehmen. >>>

Mark Alexander

Chávez Urges Reform for Venezuela and Possible Oil Embargo for the US
Photo of Hugo Chávez courtesy of the BBC
BBC: Venezuelan President Hugo Chavez has urged voters to approve constitutional changes in a referendum on Sunday.

Addressing tens of thousands of supporters at a rally in Caracas, he also threatened to stop oil supplies to the US if it tried to disrupt the vote.

The reforms include allowing abolishing presidential term limits and ending the autonomy of the Central Bank.

Mr Chavez said the proposed changes would return power to the people, but critics accuse him of a power grab.

Mr Chavez said that his opponents could try to sabotage the vote, with backing from Washington, through violent protests.

He said: "If this [referendum] is used as a pretext to start violence in Venezuela, Energy Minister Rafael Ramirez on Monday will order that oil exports to North America be stopped."

He added that troops had been sent to "protect" the country's oil fields.

Mr Chavez has accused Washington of conspiring to topple his government and possibly backing plots to assassinate him. US officials have called the accusations ridiculous. Chavez urges reform for Venezuela >>>

WATCH BBC VIDEO:
Hugo Chávez rallies supporters

Mark Alexander