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Soros on the euro

George Soros writes in the FT today, saying that the euro will face bigger tests than Greece, and opining that "the construction is patently flawed", and that a "fully fledged currency requires both a central bank and a Treasury. The Treasury need not be used to tax citizens on an everyday basis but it needs to be available in times of crisis. When the financial system is in danger of collapsing, the central bank can provide liquidity, but only a Treasury can deal with problems of solvency. This is a well-known fact that should have been clear to everyone involved in the creation of the euro. Mr Issing (one of the founders of the euro) admits that he was among those who believed that 'starting monetary union without having established a political union was putting the cart before the horse'. " 

From nationalization to terrorism, social revolutions to government regulations, sudden political changes can generate acute economic reverberations in markets and investments across the globe. In this video interview, Ian Bremmer discusses the value of developing business strategies that help companies and investors limit their risk exposure to these shocks. He also shares political risk–management lessons from his new book, The Fat Tail: The Power of Political Knowledge for Strategic Investing, co-written with colleague Preston Keat. Bremmer, the president and founder of political-risk consultancy Eurasia Group, spoke with McKinsey’s director of publishing, Rik Kirkland, in Eurasia Group’s New York office in March 2009.

Bank sector outlook 2010

For the banking sector, 2010 may be a year of corrections to excessive share price movements, a return to normal banking operations, and capital strengthening.

Tech companies increasingly are facing the prospect of falling credit ratings in light of exposure to ailing Asian economies and, as a result, are finding it more difficult to raise money to do business. Hewlett-Packard has become the latest tech company to receive a downward revision of its financial outlook by debt rating agency Standard & Poor's.

U.S. Diversified Manufacturing: 2010 Outlook

The number of negative rating actions for the U.S. diversified industrials sector is likely to be much lower in 2010 than in 2009 as rating trends are expected to stabilize. A return to economic growth across many regions, the gradual completion of restructuring and downsizing programs, issuers' focus on stronger balance sheets, and a more stable operating environment compared to the early phase of the global recession will all contribute to more stability in 2010. The pace of ratings downgrades in the broader U.S. corporate bond market slowed materially in the third quarter of 2009, which would be consistent with expectations for a slowly improving global economy and better performance by most companies in the diversified industrials sector. Currently, Negative Rating Outlooks among diversified companies rated by Fitch significantly outnumber Positive Outlooks, but as issuers repair their credit profiles, Negative Outlooks could be revised to Stable and upgrades could increase.

The specter of sovereign default looms large for world economies in coming years, and the debt tsunami that has engulfed countries from the United States to Dubai poses a threat to recovery, say top money managers at a recent Reuters Investment Summit.

There is uncertainty over the likely state of the British housing market in 2010 with experts on Monday making contrary predictions. Hometrack, which collates and interprets data for the housing and residential industries, has issued a gloomy prediction -- house prices will fall in 2010 by 1 percent.

Will inflation come to haunt us, and if so when?

Is galloping inflation around the corner? Without doubt, the United States is exhibiting some of the classic precursors to out-of-control inflation. But a deeper look suggests that the story is not so simple.

Marking the 20 th anniversary of Templeton Emerging Markets investment trust (Temit), fund manager Mark Mobius says the growth of emerging markets is set to continue unabated, leaving the developed world in its wake. Accounting for around 80% of the world's population, emerging markets have recorded a combined annual growth rate of 5.8% over the past 20 years, more than double the 2.5% growth seen in established economies. According to the Economist Intelligence Unit, the GDP growth of emerging markets is expected to be 3% in 2010, compared to growth of -4% in developed regions.

As if forex traders didn’t have enough to worry about these days, now there is a new concern- that of sovereign debt default. The last couple months have witnessed a spate of minor episodes, all of which paint a picture of frightening cohesiveness about the state of sovereign finances, and the ability of countries to continue to finance and service their debt.

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