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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (83291)	11/16/2011 9:27:08 PM
From: Fiscally Conservative	Read Replies (1) \| Respond to of 217770

Would you mean to suggest GS as in Goldman Sachs ?

To: Haim R. Branisteanu who wrote (83291)	11/17/2011 2:20:21 AM
From: elmatador	Respond to of 217770

Remember when former communist countries were cheap? Lots economic activities! Italians and French were opening restaurants in Prague. Software houses were using Czech engineers. Architecture bureaus were using Hungarians. Scandinavians were doing real estate development... That was 2000- 2001. Then they wanted the good life of thier neighbors and entered the EU. Last time I was in Prague (2005) place had been inflated to fit in European neighbors... Now time to return to natural size... Hungary sparks contagion fears By Neil Buckley in London and Kester Eddy in Budapest «As shockwaves from the eurozone crisis radiate outwards, Hungary has felt the full force of their impact. Budapest has endured three difficult bond auctions in a week, yields have shot up, and the forint has tumbled to record lows. That, in turn, is fuelling inflation and increasing the pain for hundreds of thousands of Hungarians who took out mortgages in foreign currencies when the forint was much stronger. Fitch and Standard & Poor’s on Friday shifted their credit outlook for Hungary, rated on the lowest investment grade, to negative – making a downgrade to junk status appear only a matter of time. With the highest government debt among central and east European countries, Hungary has seen credit flows slow as investors have fled risk and the growth outlook for its biggest market – the eurozone – has darkened. There are now fears that Hungary’s predicament could foreshadow a new wave of contagion to CEE countries, which were particularly badly hit by the 2008 financial crisis. Hungary’s centre-right Fidesz government is nonplussed. It says it has worked hard to control the budget deficit, targeting 2.5 per cent of gross domestic product next year, and started reducing government debt from the 80 per cent of GDP inherited from the previous administration. “We are not Greece,” says Zoltan Kovacs, a government communications minister. “We suspect some speculative steps behind this. It is not justified at all.” Laszlo Akar, vice-president of GKI, a Budapest economic research institute, agrees that the current pressure is “not justified by the budget stance”. Janos Samu, a macro-economist at Concorde Securities in Budapest, adds that Hungary’s strong exports and a current account surplus, together with EU funds flowing in, should put it in a strong position. But many economists suggest Hungary may be being penalised for “unorthodox” policies. After winning elections in April 2010, the Fidesz government turned its back on further funding from the International Monetary Fund, which provided a bail-out in 2008. It wanted, instead, to stimulate growth and temporarily run a higher deficit. But the European Commission insisted Budapest must continue deficit-cutting, forcing a rethink. Economists say the government’s policies since then have often appeared improvised. It went through with some planned tax cuts, but to fill the revenue gap it announced a big banking tax and “crisis” levies on the telecommunications, retailing and energy sectors, irking foreign investors. The government sparked further controversy by shifting 3m Hungarians’ savings from a mandatory private pension system back into the state pension fund. Most recently, it riled Hungary’s mostly foreign-owned banks by offering foreign-currency mortgage holders the chance to pay off loans at artificially low exchange rates, with banks shouldering the losses. “Probably the market has only now understood the economic effects of the negative institutional developments in Hungary since the last election,” says Mr Akar. Analysts believe Hungary’s $52bn foreign exchange reserves mean it could survive the first half of next year without foreign financing, but then it would struggle. To ease pressure on the forint, Timothy Ash, emerging markets analyst at Royal Bank of Scotland, suggests Hungary must raise interest rates, use reserves to defend the currency, or return to the IMF. The central bank on Tuesday indicated it might “gradually” tighten monetary policy from the current 6 per cent, but Citigroup warned this would be a “shot in the head” for the economy. Intriguingly, Janos Lazar, head of Fidesz’ parliamentary group, did not rule out returning to the IMF this week. But the government’s official line remains that it has “no intention” of doing so. “I don’t sense yet from the government’s body language that they are ready to cave in on the IMF front,” said Mr Ash. “This leaves the forint centre-stage.” Copyright The Financial Times Limited 2011. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

To: Haim R. Branisteanu who wrote (83291)	11/17/2011 5:23:35 AM
From: elmatador	Respond to of 217770

Will Latin America weather the storm? hard to see much evidence that the eurozone crisis has hit Latin American economic activity. Will Latin America weather the storm? November 16, 2011 7:45 pm by Jonathan Wheatley Is the fallout from the eurozone hitting Latin America? Yes and no. Here are two headlines that popped up one after the other on a beyondbrics terminal on Wednesday afternoon: Chile Peso Slides for Third Straight Day on European Debt Woes Chilean Central Bank Sells Five-Year and 10-Year Peso Bonds Er – is that risk off or risk on? Here’s the top of the peso story: Chile’s peso, the worst performer over the past week among 25 emerging-market currencies tracked by Bloomberg, fell for a third day as concern that the European debt crisis is worsening cut demand for higher-yielding assets. How do you square that with this, the top of the bond story (also Bloomberg)? Chile’s central bank today sold 41 billion pesos ($80 million) of five-year and 10-year fixed-rate bonds in pesos… The bank set a yield of 5.3 percent on the five-year bonds and 5.55 percent on the 10-year bonds. The central bank received orders for 157 percent of the five-year bonds sold and 163 percent of the 10-year bonds on sale, it said. OK, that’s not the lowest yield around. Brazil sold a $1bn 30-year bond at 4.7 per cent not two weeks ago. Nor, however, is it the highest – Italian five and ten year bonds were above 7 per cent for the second day running on Wednesday. And – as news of an impending $500m five-year bond from Banco do Brasil on Wednesday suggests – the fact that Chile is issuing at all shows investors are not exactly running screaming from Latin American assets. But the picture, evidently, is ambiguous. Financial contagion is happening. The yield on Mexican ten year bonds has widened by 30 basis points since Friday. The difference between yields on Brazilian bonds maturing in January 2013 and January 2017 is 94 bps today, up from 70 bps two weeks ago. The sliding Chilean peso is just another example of jitters spreading across the region. But this is a far cry from the beatings being dealt out in eastern Europe. And it is hard to see much evidence that the eurozone crisis has hit Latin American economic activity. “Latin American governments have become very good at minimising the downside risk to growth,” Siobhan Morden of RBS told beyondbrics. “Most countries have normalised their policy [interest] rates and built up foreign reserves so they have more firepower for managing an external shock.” Furthermore, she says: “Latin America is not in the epicentre of the crisis. Nobody will be immune to a protracted slowdown in global markets. But it will come in waves, and Latin America will probably offer better prospects of growth than other markets.” Hence the ambiguity: as our conflicting headlines show, investors looking for a safe haven are still turning to some Latin American assets, even as they flee from others. This doesn’t mean broader contagion won’t come. Tony Volpon of Nomura in New York told beyondbrics: “There is already financial contagion but not clear economic contagion.” He says the latter could be just a matter of time. We don’t know, as he puts it, whether the eurozone is entering a death spiral or if the scale of risk will provoke an eleventh hour policy response to mitigate the damage. For the time being, he says: “People don’t know where to put their cash. Latin America is still the new safe haven. But if things get really out of control in Europe then that kind of money will stop and we will see a recession.” We can already see contagion through the financial channel. So far, however, there are reasons to think the damage could be less than it was in 2008-09. Then, credit to Latin America from Europe and the US stopped overnight. One of the problems then was a proliferation of financial products in which people often didn’t know who their counterparty was. There is less of that this time. And the kind of one-way currency bets made in Brazil, for example, which caused the collapse of some big companies, have long been unwound. What’s more, while European banks are big lenders in Latin America, as they are around the world, their share of lending here is much less significant than it is in, say eastern Europe. Brazil’s banking system, for example, is predominantly home grown. None of this should give any reason for complacency – nothing about the eurozone crisis recommends that. But on the financial side at least Latin America looks better placed than it was – and than other parts of the world are today – to weather a global storm. What of the other main channel of contagion, trade? Falling commodity prices are an obvious threat to this commodity rich region. But as Volpon points out, falling international prices have largely been offset by falling Latin American currencies, giving some protection to exporters’ revenues. There is also a sense that the outlook for the US – or at least the perceived outlook – has improved somewhat over the past few months while that of Europe has deteriorated. If that is borne out, it will give some protection to Latin American businesses. Ironically, most of the economic risks in Latin America today are home grown. Argentina is one obvious example. In Brazil, a two-speed economy is developing where domestic production is stagnating as import and credit-driven consumption is rising. That has put a dent in investor sentiment. It leaves those countries more exposed than better managed Chile and Colombia, for example, should the storm really start to rage.