Sarkozy Boasts of Merkel Dominance; Housing Bubble in France; Fraud in Hong Kong

May 5, 2012

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Krugman: “I’m more right than conventional wisdom” ~ of Karl Marx, maybe

Central Banking:

Fed is freaking on systemic risk posted by repos Triparty Repos ~ WSJdiscussed previously here historysquared

US:

U.S. State Budget Surpluses Rising as Economy Lifts Tax Revenue~ BloombergThis cycle, states have been helped by balanced budget amendments and the Fed’s suppression of interest rates – the latter forces people to reach for yield.

Frack First, Disclose Chemicals Later Under U.S. Rule~  Bloomberg -a BP-like crisis is a minor tail risk. Japan still has not turned on its nuclear reactors

World:

Sarkozy boasts of extracting serious concessions from Merkel ~ Bloomberg. It could be constructive to observe Hollande and Merkel’s body language when they meet to see who is dominant – see Bo Xilai article.

Hollande ‘Pragmatic’ on Fiscal Pact, willing to deal with Merkel ~ Bloomberggame theorist Bruce Beueno de Mesquita believes leaders in democracies cannot move too far. A bloomberg guest also wondered whether a socialist could get a through labor and benefits reforms that a Sarkozy could not, like Germany did a decade or two ago.

France Faces 40% House Price Slump, says Pierre Sabatier of PrimeView. ~ UK Telegraph  - Yet another

After slicing rates 350bps since August, Brazil Said to Limit Returns on Savings Accounts to 70% of Selic, hints at further cuts  ~Bloomberg – Another government adopts financial repression and enters the competitivedevaluation  game.

Four European elections, outside of Germany, this weekend will serve as a referendum on Merkel ~ Bloomberg

China:

Sun Hung Kai Properties Suspends Trading of Hong Kong Shares pending price sensitive announcement Bloomberg ~ the centripetal force trending to the eye of the storm. I looked at this one as a short, but had enough exposure via the miners and metals. Frauds follow bubbles.

Two companies hold 40 to 49 percent of London copper stocks bloombergyou have tail risks on both the long and short side of copper, short squeeze amid a rise or forced selling from the hoarding and financing schemes that is propping up prices.

Almost 500 Chinese shipyards out of a total of more than 1,600 may close because of falling orders and decreasing loans between the hedges 

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