1. Federal Reserve launches Operation Twist
CNN Sep 21, 2011
NEW YORK (CNNMoney) -- The Federal Reserve announced "Operation Twist" Wednesday, a widely expected stimulus move reviving a policy from the 1960's.
The policy involves selling $400 billion in short-term Treasuries in exchange for the same amount of longer-term bonds, starting in October and ending in June 2012.
While the move does not mean the Fed will pump additional money into the economy, it is designed to lower yields on long-term bonds, while keeping short-term rates little changed.
The intent is to thereby push down interest rates on everything from mortgages to business loans, giving consumers and companies an additional incentive to borrow and spend money.
"This program should put downward pressure on longer-term interest rates and help make broader financial conditions more accomodative" the Fed said in its official statement.
2. Global Stocks Drop 20% Into Bear Market
Bloomberg Sep 23, 2011
Stocks fell, pushing the MSCI All- Country World Index of 45 nations into a bear market for the first time in more than two years, after the worsening European debt crisis and threat of a U.S. recession erased more than $10 trillion from equities since May.
The MSCI index, which slipped 0.3 percent as of 1:33 p.m. in Hong Kong today, has lost more than 20 percent since peaking on May 2, meeting the common definition of a bear market. It tumbled 4.5 percent to a 13-month low of 277.38 yesterday. The MSCI World (MXWO) Index of shares in developed nations also fell into a bear market yesterday, plunging 4.2 percent. The MSCI Emerging Markets Index reached the 20 percent threshold on Sept. 13.
The world is poised for a financial crisis, Mohamed El- Erian, chief executive officer of Pacific Investment Management Co., said in Washington yesterday. Finance chiefs from the Group of 20 nations pledged late yesterday to address “heightened downside risks” to the global economy, echoing language used by the Federal Reserve on Sept. 21 when it announced a $400 billion plan to spur growth as the recovery from the worst contraction since the Great Depression falters.
“The market is pricing in a recession,” said Ng Soo Nam, the Singapore-based chief investment officer at Nikko Asset Management Co., which oversees about $154 billion. “Stocks are looking cheap, but it will take a lot of courage to believe that. Things could get worse. The risk of a sovereign-debt default in Greece is the most significant concern.”
3. Greek default: What it would mean
CNN September 19, 2011
Risk of a Greek default is 100% according to credit default swap traders, while the probability is rising in Portugal, Italy, Ireland and Spain.
NEW YORK (CNNMoney) -- Experts agree it's almost certain that Greece will not be able to pay all of its debts. But if the country does default, what happens next?
Greek leaders are struggling to agree to a set of painful budget cuts, including layoffs and new taxes, in order to get the next round of bailout cash from its European partners. But Greece is in the midst of a painful recession, which is cutting tax collections and causing it to sink even deeper into the deficit hole.
And even if Greek and European officials can agree on deficit reduction measures, the bailout plans need to run a gauntlet of votes in 17 separate European parliaments. Last week, just the news that the Austrian parliament had failed to set a timetable for a vote sent European and U.S. markets sharply lower.
Meanwhile, investors trading in credit default swaps, which are essentially bets on whether or not there will be a default, are now pricing in nearly a 100% chance of default on Greek debt.
A default in Greece could cause investors to flee the debt of other troubled European economies, including Portugal, Ireland, Italy and Spain. Investors trading in credit default swaps are now placing the chance of default in those countries at between 28% to 66%.
While Greece has only about €300 billion ($411 billion) in outstanding debt, believed to be mostly in the hands of European banks, adding all five countries' debt together comes to €2.8 trillion ($3.8 trillion).
Spain and Italy are particularly worrisome. If those countries were to default, European authorities would not have enough money to bail them all out.
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And a wave of European debt defaults will topple Europe into recession, which would
hit a U.S. economy already at risk of falling into a double-dip recession.
4. Tech guru, married to film royalty – Ashton Kutcher's more than a pretty face
Charlie Sheen's replacement on Two and a Half Men plays dumb hunks and is married to Demi Moore. And he could soon be ridiculously rich.
The Observer Sep. 18, 2011
Life often imitates art, but perhaps never as strangely as in the current case of Ashton Kutcher, the puppyish actor best known for playing dumb but good-looking characters in US sitcoms and Hollywood movies. Tomorrow night Kutcher, 33, who is married to A-list actress Demi Moore, will replace Charlie Sheen's old role on the hit TV show Two and a Half Men. Kutcher will play an internet billionaire – a role tailor-made for an actor who is, in fact, one of the savviest and best known investors in California's supercharged Silicon Valley.
Kutcher has carved out a reputation as a master of the highly complex and ultra-competitive start-up scene whose celebrity touch – and millions of dollars in potential investment funds – can turn a company from idea to reality, send share prices soaring and net a huge financial reward at the same time. He has already earned millions of dollars with his canny investments, some of which are a closely guarded secret. "People think pretty highly of him in the Valley. It is kind of unique that a Los Angeles actor is involved in the Valley tech scene," said David Gorodyanksy, co-founder of tech start-up AnchorFree and a tech adviser to the San Francisco mayor's office.
5. Israel faces 'regional tsunami' set off by Arab Spring
CNN Sep 22, 2011
(CNN) -- When Israeli Prime Minister Benjamin Netanyahu gets ready to address the U.N. General Assembly on Friday, he will look out at some not-so-familiar faces. The neighborhood has changed since last year's global gathering, and Israel faces multiple challenges as a consequence of the unfinished business known as the Arab Spring.
Israel's closest partner in the Arab world, former Egyptian President Hosni Mubarak, is now on trial. The military council that replaced him has distanced itself from Israel and allowed space to popular opposition to the peace treaty between the two countries. While Israel sheds no tears about Syrian President Bashar al-Assad's problems, it is apprehensive about what might follow should unrest eventually unseat him. Instability in Syria would inevitably spill into Lebanon, where Hezbollah has tens of thousands of missiles aimed at Israel.
A once close relationship with Turkey is in tatters. And now the Palestinian Authority is dramatically raising the stakes over stalled negotiations on a peace settlement by looking to the United Nations to win statehood.
Six months ago, Israeli Defense Minister Ehud Barak warned a diplomatic tsunami was headed in Israel's direction. He told the Institute for National Security Studies in Tel Aviv that the Palestinian plan for recognition was an attempt to push Israel into the same corner that apartheid South Africa once occupied.
Barak also said that the Israeli government must come up with its own diplomatic initiative to counter such a move -- and be ready to tackle core issues, including security, borders, refugees and Jerusalem.
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