**Marc Faber on repercussion risks to commodities and commodity-centric economies like Canada and Australia from the looming bust of China's property bubble.
See Bloomberg clip: Faber says China's Economy is showing “danger signals”.
** UK Telegraph: Sovereign debt tops IMF worries.
“The crisis has led to a deteriorating trajectory for debt burdens and sharply higher sovereign risk. Vulnerabilities now increasingly emanate from concerns over the sustainability of governments' balance sheets,” said the Fund's Global Financial Stability Report. Sovereign debt strains may infect the banks and “prolong the collapse of credit,” with the risk of a vicious circle as this feeds back into the economy.
**In a report delivered to G20 nations on Tuesday, but yet to be published, the IMF has urged countries around the world to impose two new taxes on financial institutions: a “financial stability contribution” which levies a small charge on their balance sheets, and a “financial activities tax”, which taxes excess profits, including bonuses.
The recommendations are likely to strike fear into a banking sector reeling from the US Securities and Exchange Commission's fraud charges against Goldman Sachs.
If imposed by G20 governments, the Fund's proposals are likely to have a significant impact on the profitability of all financial institutions.
See: IMF urges double tax hit on banks to refund taxpayers.
**Canadian Finance Minister Jim Flaherty showed his usual banking sector allegiance and hallmark lack of leadership today, lashing out against the idea of a global bank tax to repay taxpayers and fund insurance against future calamities in the sector: “There is no way Canada will co-operate with attempts to impose a global tax on banks” See Flaherty rejects any initiative for global bank tax.
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Great commentary to reflect upon over the weekend
http://seekingalpha.com/article/200447-forget-about-it-friday-again
Stock Market Monkeys
Here is a story that recently started floating around the Internet:
Once upon a time in a village, a man appeared and announced to the villagers that he would buy monkeys for $10 each.
The villagers seeing that there were many monkeys around, went out to the forest, and started catching them. The man bought thousands at $10 and as supply started to diminish, the villagers stopped their effort. He further announced that he would now buy at $20. This renewed the efforts of the villagers and they started catching monkeys again.
Soon the supply diminished even further and people started going back to their farms. The offer increased to $25 each and the supply of monkeys became so little that it was an effort to even see a monkey, let alone catch it!
The man now announced that he would buy monkeys at $50 ! However, since he had to go to the city on some business, his assistant would now buy on behalf of him.
In the absence of the man, the assistant told the villagers. “Look at all these monkeys in the big cage that the man has collected. I will sell them to you at $35 and when the man returns from the city, you can sell them to him for $50 each.”
The villagers rounded up all their savings and bought all the monkeys. Then they never saw the man nor his assistant, only monkeys everywhere!
Now you have a better understanding of how the stock market works!
Canada at the Edge of Deflation's Vortex
http://canadabubble.com/component/content/article/39-hpi/825-canada-at-the-edge-of-deflations-vortex.html