Private Sector Flounder

(Reuters) - In a ramshackle township in northwest China's Shaanxi province, red Communist Party banners call on a nearby steel mill's workers to seek "progress" and avoid making "backward steps". The slogans demonstrate the hybrid nature of China's floundering steel sector, which as it tries to serve the twin masters of the state and the market has seen margins plummet and racked up a mountain of debt. Beijing's attempts to tackle the problems by forcing lumbering state-owned mills to consolidate or push up the value chain look likely to aggravate rather than solve the problems of a sector that accounts for 3-4 percent of China's GDP. An obvious solution - to allow the worst performers to go out of business - seems unlikely in an industry identified by Chairman Mao Zedong nearly half a ...

New York Times writer, Steven M. Davidoff, recently dubbed the Federal Reserve, “the most successful hedge fund around.” After reading the article, we concluded that Mr. Davidoff is the most creative financial writer around. As such, Mr. Davidoff may be the perfect apologist for today’s dysfunctional monetary “system.” Certainly, he possesses the cerebral alacrity to dodge whatever cold, hard facts may be standing in the way of a good story. “I call the Fed a hedge fund,” Davidoff cheerily explains, “because it is operating like one, leveraging its balance sheet to earn huge profits.” We might have been able to embrace Davidoff’s analysis were it not for one nettlesome fact: the Fed is absolutely nothing like a hedge fund. The Fed is, instead, more like a crime syndicate — a racketeer ...

(Reuters) - Asian shares fell into bear market territory for the year and commodities and the euro nursed stinging losses Thursday, as fears that Europe's debt crisis is still worsening prompted investors to dump riskier assets and seek shelter in the dollar. The gloomy mood was not improved by a private sector survey indicating China's factory output will shrink again in December, adding to the headwinds facing a global economy struggling with sluggish U.S. growth and the euro zone sliding back into recession. "We're quite bearish about the world at the moment," said Damien Boey, equity strategist at Credit Suisse in Sydney. "You're looking at basically the three major economies in the world causing problems." European shares were expected to make an uncertain start, with financial ...

Economic Data Analysis One Down, One to Go Relief rally following EU Summit measures - unified political will trumps outstanding questions for now. US debt ceiling issue remains unresolved, despite signs of progress. Preliminary US Q2 GDP to highlight sluggish recovery this week. Preliminary UK Q2 GDP is due this week and is also likely to prove extremely subdued, with household sector still struggling. Hopes for stronger Q3 on rebound of one-off effects in Q2. Financial markets heaved a sigh of relief as the latest EU crisis summit passed a wave of new measures to address the worsening sovereign debt crisis. Amidst measures aimed at supporting Greece directly, including a further €109bn bail out and private sector involvement hoped to total around €40bn, the summit also ...

(Reuters) - Asian stocks fell on Wednesday and the dollar wavered after uninspiring comments from Federal Reserve Chairman Ben Bernanke added to worries about the slowing global economy. European shares were also expected to fall, extending their losing streak to a sixth straight session, tracking weakness in Asia and on Wall Street. Financial spreadbetters expected Britain's FTSE 100 .FTSE and Germany's DAX .GDAXI to fall as much as 0.5 percent and France's CAC 40 .FCHI to open down as much as 0.6 percent. Bernanke acknowledged an economic slowdown in the United States, but offered no suggestion of further stimulus to support growth, souring sentiment across equity markets and toward the dollar as investors expect U.S. interest rates to remain low for a longer period of time. The ...

(Reuters) - The United States will lead the rich world's economic recovery over the next two years while Japan and major European economies flounder by comparison, according to Reuters polls of more than 200 economists. Backed by strong retail sales that rose for the fifth straight month in November, the poll showed expectations U.S. consumers will step up demand, prompting a wave of upgraded forecasts for economic growth there. By contrast, economists kept a somber growth outlook for the euro zone and Britain, both in fiscal retreat, while in Japan they predicted a brief and sharp contraction in the current quarter followed by modest growth thereafter. "Three months ago the key issue for markets was whether the softness in economic activity was temporary or a sign of something more ...