DEBKAfile Exclusive Report November 24, 2008
This weekend sees make-or-break efforts by Western finance ministers and international financial institutions to produce a plan that will drag their economies back into equilibrium before the world's markets open Monday, Oct. 13. They are working to the dread drumbeats of turmoil, panicky investors and looming recession, which some economists predict will be more disastrous than the 1930s slump which led to World War II.
In their statement Saturday, the G7 said that they were working on a rescue package tailored for each country within a common framework that would include recapitalizing banks, ensuring strong deposit insurance to protect savers and restarting frozen credit and mortgage markets.
Many leading Western economists strongly doubt that these measures will do the trick. Matters have gone too far and the looming leadership vacuum is fueling financial fears.
DEBKAfile Exclusive Report June 1, 2005
Holland's potential rejection of the European Union constitution Wednesday, June 1, in the wake of France now looks like another nail in the euro's coffin. Tuesday's initial seven-month low against the dollar of one euro: $1.2350, steadied slightly the next day at around $1.2320 Wednesday. But for several weeks, the currency markets have been dominated by the strengthening of the US dollar at the euro's expense. During the months before the French and Dutch votes, the 12-nation currency had already slid against the dollar by just over 7%, after gaining on the US currency for three straight years. The downward trend was further confirmed by the euro's dive earlier this week against other important world currencies, sterling and the Japanese yen. The next EU summit taking place in Brussels on June 16 will be a crisis meeting to deal with a volatile economic reality threatening to weigh heavily on the union's once-bright prospects.
DEBKAfile Exclusive Report May 29, 2005
Nine of Israel's top business executives and 11 heads of three leading inquiry companies - including Modiin Ezrahi -are in custody suspected of complicity in a massive computerized commercial espionage conspiracy. Sunday, Tel Aviv magistrate lifted gag order on the case which police code-named Horse Race. Prosecution is reported to have located a state witness. Michael Haephrati, who was arrested in London Thursday, May 26, with his wife, is suspected of designing the illegal raider software called Trojan Horse for the three inquiry firms. They offered clients business intelligence on their rivals, some of whom trade on the stock exchange, by illegally planting spy software in the targeted computers and downloading their classified data. The Scotsman reports that before he was arrested on the Israeli extradition warrant, Michael Haephrati, who also has German nationality, was questioned by detectives from the National Hi-Tech Crime Unit on a "separate matter."
DEBKAfile Exclusive Report May 17, 2005
The US dollar finished last week's trading at its highest level in six months against the euro (1.2620 euro per dollar). It also made a strong showing against all other major world currencies. Another round of good economic figures - especially the surprise narrowing of the American trade deficit in March, as published on Monday, May 11 - was a contributing factor. Other boosters were the slide in oil prices, the continuing surge in dollar interest rates, the huge speculative closing positions of the punt (=gamble), wagering on a revaluation of the Chinese currency, and the weak economic figures coming out of Europe. debkafile's financial analyst sees the dollar emerging from the trough into which it began sinking in 2001 and expects a steady climb from now on and in the long term.
DEBKAfile Exclusive Report April 21, 2005
Sharp falls in equity markets around the globe, the $10 oil price drop from an all time high and the falling-off of US bond yields from 4.60 to 4.25% - all add up to a tremor rippling across world markets that is generated by fear of a slowdown in the making. This fear is succored by a dangerous combination of factors: an expanding trade deficit, rocketing oil and commodities prices, a weak American labor market and, most of all, looming stagflation (inflation plus recession). International Monetary Fund (IMF) heads gathered last weekend in Washington voiced concerns about growth, especially in the United States, under the burden of expensive oil and the soaring US trade deficit, which surged in February to the new all-time record of $61 billion. Finance ministers and central bankers from Europe, America and Japan, are deeply disturbed by high oil prices.
DEBKAfile Exclusive Report March 30, 2005
Rallying fast during the last two weeks of March, the US currency gained about 4% against all major currencies - the euro for example, which traded at $1.3480 on March 14 and dipped to $1.292 by March 29. This trend was the result of the change in the market's estimation of American interest rates. The continuous rise in the short-term rate (which the Federal Reserve put up again by 0.25 % on March 22), coupled with the Fed Chairman Alan Greenspan's inflation warnings for the future, bumped up the yield on 10-year American bonds to 4.60%. The first to get hurt were emerging markets. In a matter of days, currencies like the Turkish lira, South African rand, Hungarian forint and polish zloty slumped sharply against the dollar by as much as 3-10%.
DEBKAfile Exclusive Report March 4, 2005
The last three years were very kind to investors in such emerging markets as Mexico, Turkey, South Africa, Brazil and others. High interest rates combined with soaring equity markets netted generous profits for these investors. But debkafile's financial analyst warns investors that a sharp sell-off may be round the corner as American interest rates continue their upward march. For two to three years, investors around the globe have been moving huge capital flows into emerging markets - through diverse channels: local currencies, stock purchases in those markets, local bonds (which carry high-yield), and real investments.
DEBKAfile Exclusive Report January 5, 2005
The US dollar steadied Wednesday, January 5, after its biggest surge since mid-2004 began to correct the year's end weak performance against the Japanese yen and the euro. Still, most big banks and investment houses are predicting its continuing slide in 2005 too. debkafile's financial expert is cautiously optimistic. In his view, the decline may have hit bottom and a slow recovery is in store over the next two or three months. All in all, the currency markets are ripe for a dollar boost. Some indicators show the market as being more than ready for a technical correction that adjusts the dollar-to-euro imbalance to a healthier 1.30-1.32 dollars per euro. The approaching Palestinian Authority election and the Sharon government's settlement withdrawal plan due to go into effect in the second half of 2005 are both expected to generate turbulence and uncertainties that will drive investors away from the shekel to find refuge with the dollar. debkafile's financial analyst predicts a leveling out in the coming weeks at NIS4.45 per dollar.
DEBKAfile Exclusive Report December 7, 2004
The sinking dollar and the soaring US stock market will lead, according to our financial expert, to a sell-off of American government bonds and, as a result, an increase in long-term interest rates. What is the connection between the price of bonds and interest rates? And how do they affect real-estate and the stock and foreign exchange markets? Unlike most of Asia - and the rest of the world, China pegs its currency the yuan to the US dollar, to the annoyance of America, which is calling for a yuan revaluation. Since China is the biggest exporter to America and therefore the prime cause of America's escalating trade deficit, the Bush government hopes for a stronger yuan to help cut that deficit. The effect of a sharp sell-off of US bonds on world stock-markets, real-estate and currency trading would be powerful and could even in some circumstances trigger world crises.
DEBKAfile Exclusive Report August 16, 2004
Even after ending the last trading week with small gains, US stocks were still low, closing at 9,825 for the Dow Jones and 1,757 for the NASDAQ (technology stocks index). Since the beginning of this year, the NASDAQ has shed ten percent of its value and reverted to its September 2003 low. Attempting to predict whether bottom has been touched would be like catching a falling knife - you'd be cut before you smiled. The continuing plunge of US equities, echoed by most equities around the world, has may causes:
DEBKAfile Exclusive Report September 17, 2003
The story behind the call issued Tuesday, September 16, by Yasser Arafat's adviser, Jibril Rajoub, for a ceasefire is a typically devious one, according to debkafile's exclusive Palestinian sources. On the advice of his European friends, Arafat decided to adjust his short-term game plan; before unleashing his terror campaign, he thought it would be wise to capitalize on some of the diplomatic mileage awarded him after the Israeli government's decision in principle to "remove" him. A Palestinian government under Ahmed Qureia (Abu Ala) will now go forward. One of its first acts will be the declaration of a unilateral ceasefire of unlimited duration. The two steps are calculated to make a good impression on the Middle East Quartet when its members meet later this month. They may even be persuaded to pressure Israel to halt its military actions against terrorist leaders, suspend settlement building activity and give up the security fence.
DEBKAfile Exclusive Report August 3, 2002
The economic promise presented by the new Middle East strategy stays firmly under wraps - no less than the covert start of military operations. Israeli's deep budget cutbacks, the spreading poverty and agonies of unemployment are profoundly demoralizing - and there is more to come. Critics of the Sharon government, like former prime minister Binyamin Netanyahu, have been encouraged to look forward to is imminent demise.
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