Global Economy

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Europe's Unprecedented Rate-Slashing Gives Us a Classic Profit Play

European Central Bank President Mario Draghi is desperate.

The European Union has been plagued with years of falling inflation and stubbornly high unemployment.

And now its central bank is attempting to employ "unconventional" policies to kick-start the economy.

Using tactics never tried before, the ECB has just entered uncharted waters.

But if we look at the history, we'll see the perfect opportunity to profit...

The Emerging Market Game Changer Is Here

The group of five nations - Brazil, Russia, India, China, and South Africa, otherwise known as the BRICS - is making some intriguing financial, economic, and political moves.

They're committing tens of billions of dollars each to organize their own versions of an IMF and World Bank.

Many observers thought the BRICS nations would encounter too many obstacles to collaborate effectively.

But after announcing such plans just over a year ago, the next BRICS summit in July is likely to see the official launch of these institutions.

The implications are huge for investors...

This Latest Chinese Investment Trend Is Heating Up Social Strife Abroad

China is hungry and looking outside its borders for ways to feed its 1.35 billion citizens.

In recent years Chinese companies and investors have become some of the largest players in the vertical supply chain for global agriculture. It's a Chinese investment trend that will only accelerate as the country's population increases.

According to the Heritage Foundation, Chinese investors have pumped $27.9 billion into the agricultural sectors of more than 30 nations.

But one aspect of this Chinese investment trend has stirred some concern. The Asian giant has bought vast tracts of farmland in nations across Asia and Africa.

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How to Make 46% on My "Australian Independence"

I like Australia's stock market right now. I think it provides you with a ton of upside potential.
Virtually every analyst on Wall Street disagrees, of course. They hate Australia. But they didn't like Chile, either, where we're up 46%. And they weren't crazy about Indonesia - another market that's making us good money.
Independent thinking pays well, plain and simple. And right now, Australia can pay you extremely well.
And there's more than one way you can make money.
The broad-based ETF is the no-brainer, of course. Based on the country's economic growth rate, it could increase twice as fast as the S&P 500.
But you can do even better by picking up shares of one (or all three) of Australia's best companies, as you'll see.
This is just a great place to grow your money right now, for three reasons...

How China's One-Child Policy Will Transform the Future Global Economy

In 1979, China implemented a one-child policy in an effort to alleviate social, economic, and environmental problems in the country.

Government officials indicate that the policy prevented over 250 million births between 1980 and 2000, and 400 million births between 1979 and 2011.

"China was a very different place back then," recalls Money Morning Global Investing & Income Strategist Robert Hsu. "It was very poor and there was overpopulation; they had to do something about it. I'm not saying that it's the best policy, but that's what they did to fix these problems. Nowadays though, the economic situation in China has vastly changed."

And changed it has - China is currently the world's second-largest economy, which is precisely why investors worry about how demographic issues there will play out globally. How will China's shrinking birthrate affect global economic growth?

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New Basel Banking Regulations Mean Every Bank is its Own Cop

The Basel Committee on Banking Supervision, a global group made up of central banks, just came out with its new bank capital standards, the Third Basel Accord (Basel III), to address some of the problems and weaknesses in global financial regulation.

These problems were seen to have been a partial cause of the global financial crisis.

When banking systems adopt the regulations, which are completely voluntary, it's seen as a step towards greater transparency, a more robust system. It's seen as regulators finally getting tough. This is all part of the mad, frantic scramble for... credibility among regulators.

Sounds Good In Theory

The latest round of Basel III regulations, which were approved and adopted by the Fed just last week, call for banks to begin strengthening and improving the quality of their capital reserves. Quantity and quality of capital are absolutely vital to a healthy banking system.

It was the paradigm of the "honest-to-god, AAA mortgage-backed security," with all of its rubbish quality, willfully overstated and overestimated by U.S. ratings agencies, which helped lead us down the path to collapse just five years ago.

So why not have the banks shore up their defenses, take on more capital of good quality?

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Don't Let the Global Economy Wreck Your Investment Strategy

Global Economy wreck your investment strategy

There's trouble all over the global economy, from fresh tremors in the Eurozone debt crisis to unrest in the Middle East and uncertainty over the fate of Obamacare here at home.

With so many threats to the markets coming from so many directions, what's an investor supposed to think?

Fortunately it's the job of Money Morning's Chief Investment Strategist Keith Fitz-Gerald to figure out which issues investors need to watch and which ones they don't.

On Fox Business Keith spells out what he thinks are the biggest threats to the global economy now and what investors need to be doing about them.

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Want to know more? Here's what Keith thinks would be The Worst Investing Mistake You Could Make Right Now.

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Here’s How to Invest in Africa’s $300 Billion Electricity Boom

President Obama is wrapping up a wide-ranging trip to Africa this week, one in which he talked about everything from human rights, the triumphs of Nelson Mandela, a return to growth in Zimbabwe and the prospects of an African renaissance.

But it was his comments about access to electricity that should have drawn the most attention. The President is setting the stage for a huge leap in Africa's standard of living - and most people probably didn't notice.

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What Kim Jong Il's Death Means for the Global Economy

All eyes are on North Korea and its repressed economic system this week after the country announced early Monday that Kim Jong Il, the ruling dictator for 17 years, died Saturday. The political instability to follow Kim Jong Il's death could ripple through the global economy, weighing on confidence and growth.

Kim Jong Un, the third son of the deceased leader, will take his place. Kim Jong Un is only in his late-twenties, and has only been groomed for the role since 2008, compared to his father's 14 years of training.

While North Korea has remained economically isolated from much of the world, its military aggression, volatile relationship with South Korea and the United States, and the uncertainty surrounding Kim Jong Un's readiness to lead has put the world on alert.

"This is a tinderbox situation," said Money Morning Chief Investment Strategist Keith Fitz-Gerald. "Almost nothing is known about Kim Jong Un, this "Great Successor.' The deeper questions are the longer-term issues related to a potential power struggle within the ruling elite, given that Kim Jong Un may not have the training nor the power base from which to assume control. Now is the time to watch carefully."

That said, here's what to monitor in the global economy as North Korea rebuilds after Kim Jon Il's death.

North Korea's economic future: North Korea is a notoriously closed society and has shunned foreign investment. Kim Jong Il had started to show signs of possibly being open to economic reform. He even toured Chinese factories to learn about their rapid economic growth, and visited Russia to discuss building a gas pipeline across North Korea.

Of course, that's unlikely to change at least until the country's new leader gets established.

Still, there's hope the long-term outlook for North Korea will change since Kim Jong Un has more Western world exposure than his father, having attended school in Switzerland. That could encourage him to reach out more to other countries to help improve his impoverished nation.

"With China as its example, I am hopeful that North Korea comes out of its shell and slowly crawls to its borders to see who is willing to start a dialogue and trading with the rogue robot nation," said Money Morning Capital Waves Strategist Shah Gilani. "If it's going to be a scary and not a salutary coming out party, all bets are off; but I'm a betting man, and I'm betting North Korea will emerge from its cocoon."

South Korea's economy: South Korea faces the biggest economic disruption. The country already forecast a drastic export slowdown for 2012, with shipments growing only 7.4% next year, compared to 19.2% in 2011. The threat of North Korean instability could also slam consumer confidence, and cause the economy to grow even slower than the 3.7% gain predicted for next year.



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It's Time to Brace for a Repeat of 2008

If you think the global economy is out of the woods now that the European Union (EU) has expanded its effort to solve the sovereign debt crisis, then I'm afraid you're sorely mistaken.

No doubt, the European crisis is far from being solved - but that's hardly the only potential economic catastrophe looming on the horizon.

Indeed, two successive articles in the Financial Times last week warned of a new disaster approaching: They forecast 25% declines in financing volume for both commodities finance and aircraft purchases in 2012.

Now that would be truly bad news.

You see, the most job-destroying feature of the 2008-09 recession was a 17% decline in world trade that was caused by the financial crash and the disruption to the world's banks. That decline intensified recessionary conditions and caused millions of job losses worldwide. Some 700,000 jobs were being lost each month in the United States alone for a period in early 2009. That's more than double the previous worst monthly losses since World War II.

And now we could be in for a repeat.

In fact, it's hard to see how one can be avoided.

In today's distorted world financial system, a combination of over-loose monetary policy, intractable budget deficits, and tightening regulation seems to have made a credit crunch more or less inevitable.

So if you're smart, you'll take a moment to examine exactly why, and then figure out who the winners and losers are going to be.

Here's how.

A Disruptive Disconnect

When you look at bank lending, it's clear that the link between the huge amount of world money growth and the meager supply of lending to productive enterprise is broken.

U.S. Federal Reserve Chairman Ben S. Bernanke and his international colleagues can hand as much money as they like out to banks, but if the banks don't lend it, that money will be wasted. And right now the banks aren't lending to trade and private businesses for three reasons:



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Disaster in Japan: How Bad Will it Get?

Money Morning Chief Investment Strategist Keith Fitz-Gerald has spent almost every summer for the past two decades at his family home in Kyoto - which is why he knows Japan in a way that few other U.S. traders could ever hope to.

As part of Money Morning's continued coverage of the disaster in Japan, Fitz-Gerald is sharing those insights with readers. Here are the highlights of a question-and-answer session we held with Fitz-Gerald late yesterday ( Thursday).

For this global-investing guru’s assessment of Japan, please click here.

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What My Mother Taught Me About the Global M&A Market

When PPL Corp. (NYSE: PPL) agreed to buy British power distributor Central Networks from German owner E.On AG (PINK ADR: EONGY) last week, the $5.6 billion bid by the Allentown, Pa.-based utility highlighted a key advantage that U.S. firms have when it comes to corporate-takeover battles in the international arena: In most countries, the staff and customers of the target company prefer a U.S. suitor to those from most other nations.

How do I know this? Simple ... my mother told me.