Today's Financial Times carries an article on Greece's attempt to woo China into buying $25 bn worth of bonds. The market is watching for implementation of Portugal's deficit cutting measures announced in its budget on Tuesday. Both underscore the fact that we are in a Debt Crisis that is far from over.

"The world has issued so much debt in the past two years fighting the Great Recession that paying it all back is going to be hell--for Americans, along with everybody else. Taxes will have to rise around the globe, hobbling job growth and economic recovery. Traders like Bass could make a lot of money betting against sovereign debt the way they shorted subprime loans at the peak of the housing bubble.

National governments will issue an estimated $4.5 trillion in debt this year, almost triple the average for mature economies over the preceding five years. The U.S. has allowed the total federal debt (including debt held by government agencies, like the Social Security fund) to balloon by 50% since 2006 to $12.3 trillion. The pain of repayment is not yet being felt, because interest rates are so low--close to 0% on short-term Treasury bills. Someday those rates are going to rise. Then the taxpayer will have the devil to pay..."

Read more:

http://www.forbes.com/fo...bal-debt-bomb_print.html

The following articles are in resonance. CIC's push into commodity companies will inadvertently place Africa in its cross hairs. Inorder for efficient extration of resources, supporting infrastructure must be in place. The Chinese have entrenched themselves as top quality contractors. Good infrastructure is bound to attract additional investment in primary or extractive industries as well as manufacturing (secondary) and services (tertiary). A virtous cycle it is.

" Jan. 27 (Bloomberg) -- China’s $300 billion sovereign wealth fund is considering new investments in resource-related companies after bets on commodities producers from the U.S. to Kazakhstan paid off in 2009.

China Investment Corp. increased spending on energy and minerals assets last year to profit as the global economy recovers. The Beijing-based fund avoided the worst of the credit crunch in its first full year in 2008 and may have had a return of more than 10 percent in 2009, said London-based Jan Randolph, director of sovereign risk, analysis and forecasting at IHS Global Insight.

“They have timed the upside well both in market terms, but also to fit in with the longer-term diversification strategy,” Randolph said...."

Read more:

http://www.bloomberg.com...0&sid=aeyawIJ8FKoQ#


"For some African countries, particularly those helped by Chinese investment and its thirst for energy and minerals, another boom may be approaching.

Investors with cheap cash needing to spice up returns in more obscure parts of the globe are asking whether Africa can shift from final investment frontier into the emerging market mainstream. Reflecting this interest, Africa gets top billing at the annual meeting of the rich and powerful in Davos this week..."

http://www.businessdaily.../-/9fnt5kz/-/index.html

Follow the Money in the pictorial that potrays the flow of money from a central bank to the equity markets. It is one system through which money is created, the other being through leverage in the banking sector. The equity markets thus perform as hedges against domestic inflation.

"The steps are as follows:

* The Federal Reserve creates monetary policy and based on that policy provides increased liquidity to the markets or restricts fund flows.
* The banking system is the preferred mechanism for sending the newly created funds into the economy and financial system. Some would argue that in recent years the financial markets themselves have been able to take newly created funds directly from the Federal Reserve and leverage the new money.
* The funds created are then allocated by a pricing mechanism to either the economy or the financial system.
* Those funds that reach the financial system are then allocated among five generic forms of financial instruments: cash, fixed income, equities, commodities, and currencies.
* The money received in the equity markets is then allocated between multiple industry sectors...."

Read more:

http://ftalphaville.ft.c...kers-bove-the-blueprint/

Enlightening post (185) on money flows into equity markets as well as the Mumias one.

Wanted you to check out the article in the blog below:

http://www.zerohedge.com...new-bretton-woods-system