Nothing Fast About Recovery

You don't get a fast recovery,Harvard economist Ken Rogoff points out.It doesn't mean you're about to enter something worse.The larger risk is government debt.There is always a sovereign debt problem after a crisis as spending explodes.He thinks housing prices still have further to fall,but a double dip recession is about as likely as in a random year.He wouldn't say there's an elevated risk of one.
There are fears that slowing Chinese growth and the Euro Zone debt crisis could hinder recovery.As China normalizes and grows,it's going to have bumps like everyone else.To think it's all upside is just absurd.Property prices and leverage are probably the best indicators you're going to have a problem.China cannot keep growing its exports at the same rate it's been doing.At some point,they have to redirect their strategy.
The Euro Zone banking system has moribund banks in it,but it's not gonna get better if there's denial,Professor Rogoff believes.
Results of stress tests of Euro Zone banks are to be released this month.U.S. banks passed a similar test earlier in the financial crisis.
iShares FTSE/Xinhua China(FXI)

CME Does It Best

Mark Fisher of MBF Asset Management has been analyzing the recent flash crash in U.S. markets.He says computers took his job away on the trading floor.They process 20,000 orders in a millisecond.If the flash crash had happened at 10:30 in the morning instead of in the afternoon,it would have been a complete disaster,with the European markets being still open.
The computer types are making a lot of money.It's games,arbitraging back and forth.In times of stress,people cut back their trading,thinning volume dangerously.At that point,anything can and will happen.The Chicago Mercantile Exchange puts the market in suspension for a few seconds;it works.It's like at the Indy 500 putting out a yellow caution flag.Indeed,the Securities and Exchange Commission is planning to institute such brakes on erratic trading.
With regard to the Euro Zone debt problem,in Mr.Fisher's view,it will never work out with the Euro.You've got the Germans,working a 40-hour week,bailing out a different culture.Wait till you see the German elections.

Early Edition:Libor's Rise In Perspective

Libor,the London Interbank Offered Rate,the interest rate banks charge each other for loans,has been creeping up.This signifies a tightening of credit.On the other hand,it's nowhere near where it was at the height of the financial crisis.It was as high as 4.0 then;by last Friday,it was only at 0.54.Still,a decline in the rate would be more reassuring than an increase.Libor was at 0.25 three months ago.Now it is at its highest since July of 2009.
What's behind the rise in Libor is the European banks depositing in the European Central Bank rather than in one another-for safety.Money markets have been avoiding European banks as well.This decline of confidence in light of the Euro Zone debt problem is pushing Libor back up.The cost of money is going up as investors lessen risk.An unchecked rise could eventually result in corporate cutbacks again,bringing on another recession.

Waves of Financial Crisis

Jessica Haverson of MF Global sees the financial crisis as ongoing.The analyst says she believes we can always go lower.It is a crisis that comes in waves.The first wave was the financial freezing of credit;the second wave was the economic expression of the credit freeze;the third and current wave is a sovereign debt problem.
The sovereign debt issue is a rolling crisis.It has rolled from Southern Europe to the U.K.Eventually,it will roll to the U.S. as America faces a day of reckoning with its own debt.
MF Global is now headed by former New Jersey Governor Jon Corzine.Mr.Corzine was also CEO at Goldman Sachs before he served in the U.S. Senate and as Governor.

Prominent Investor Likes Gold

Jim Rogers,the Chairman of Rogers Holdings and author of several books,says the fundamentals are terrible for all the paper money except Canada's and Singapore's.This money has to come from somewhere.He's concerned about all countries.Nothing about the new rescue package is gonna get countries to cut their deficits enough to solve the problem.The European Union is ignoring their own rules.Even the present generation is gonna pay for this.
Mr.Rogers doubts if the Euro will be around in 10-15 years.It's continuing to weaken;be careful.The politicians all over Europe are using it as a scapegoat whenever there's a problem.It's a political currency,Jim Rogers believes.
The way things are going,people are gonna grab for something.The only thing they can grab for now is gold.It will certainly go up to 2,000 dollars an ounce by 2020.His children will own his gold,Mr.Rogers suspects.
Jim Rogers,a resident of Singapore,is a frequent guest on business television.Another Jim Rogers is the CEO of Duke Energy.
Duke Energy(DUK)

Red Flags From Factories

As soon as Christmas was over,investors sat down and reviewed economic reports.The first to be scrutinized was the U.S. Commerce Department's Durable Goods report.Orders for these costly items,which are expected to last at least three years,rose just .1%,when they were expected to rise 2.2%.The factories report was down .7%-the second straight monthly decline.Capital goods ex-aircraft fell .4%,while business capital spending dropped .9%.These figures all indicate that businesses are being more cautious in capital spending.They aren't investing as much in the equipment that helps them grow.Next to be reviewed were the Institute for Supply Management's Purchasing Managers surveys.The Manufacturing Index fell to 47.7 in December from 50.8 in November.A number below 50 indicates the sector is contracting.It was the worst reading in five years.New orders plunged to 45.7 from 51.9.Production fell to 47.3 from 51.9.These results show that even strong exports aren't working anymore.Factories are feeling the credit crunch and flattening profits due to higher costs,as domestic businesses cut back on investments or put them off.Indeed,according to Morgan Stanley(MS),global manufacturing fell .8 to51.4-the lowest level in more than four years.Manufacturing was down in Canada,the U.K. and the Euro Zone.Finally,the busy investors pored over the U.S. employment report that was released last Friday.Unemployment rose to 5% in December from 4.7% in November-the steepest increase since the recession of 2001.An uptick of that magnitude is characteristic of recessions.New jobs created totaled a mere 18,000-the least since 2003.Small wonder that the investors saw red flags on the factories,or that many of them looked to bond funds such as Vanguard's Total Bond(BND) and iShares Lehman Brothers TIPS fund(TIP),or the TIAA-Cref Instit MMF/Retail,which offered the highest 12-month yield for a taxable money market fund in 2007,at 5.19%.