After re-appointment of Bernanke as Fed Chief, markets of all kinds bristled with buoyancy and optimism last week. Indices remained healthy and currencies were steady, though the dollar did weaken a tad.

Reports of hedge funds readying themselves to offer exotic deals and foolproof protection against defaults have come in. After hedging against a hedge against a risk, if things still go wrong, the bills are to be paid by governments. Singapore Airlines and Taiwan’s China Airlines have stopped hedging against fuel prices and Harvard, battered by the 30% plunge in its $36 bn endowment, has decided to sell holdings in hedge funds and manage its money itself.

In the US, credit card defaults are at a record high, federal debt per capita is close to GDP per capita, even the postal service is mulling retrenchment of 30,000 employees, value of all property in California has declined after rising for 76 consecutive years, and net farm income is expected to plunge from last year’s 87 to $54 bn.

Tax on cigarettes has been nearly tripled, higher taxes are in the pipeline for alcohol, high income groups and companies operating abroad, and an energy tax on imported goods is being discussed. Some say the US is being Europeanised while others call it a tilt towards leftist ideologies. If Americans can move out of London because of high taxes, what would prevent them from moving out of New York?

Obama has started almost aping China, as is evident from its planned subsidies for domestic appliances; China’s program is to take comfort to its rural populace while the US emphasis is on keeping its companies alive.

Politically, Taiwan angered China last week by inviting Dalai Lama and S Korea launched its first space rocket with ‘partial’ success, suggesting the US might be moving to ‘contain’ China.

Air passenger traffic worldwide is down 7% and nobody knows the bottom for freight traffic, which is already down 20%. In the era of supply chains and quick response, nearly a third (35% in 2006) of global trade was being transported by air. Not surprisingly, upgrades to business are being offered at less than $500 by some, though US airlines have started charging extra for checked baggage.

Restaurant traffic is declining in eight major economies surveyed recently, global demand for paper is flat and notwithstanding oil staying above 70, utilities catering to major US cities are running below capacity. Globally, even beer consumption is down. Eurozone industrial orders are down 25% and Europe’s retail sales have declined for 15 consecutive months. Recently, workers of a factory in France stripped to protest against job losses.

Eastern Europe, with export dependence higher than China, is in turmoil as exports are down by over 16% and inflow of foreign funds is expected to nosedive from 254 to $30 bn in 2009.

Japan expects to be overtaken by China in GDP terms this year itself. LatAm (plus Caribbean) exports are set to experience their steepest fall in 70 years. House prices in UK are down 15% and after Japan, Korea too is moving to push medical tourism.

Retirees in UK are saddled with high debt and a sixth of them are still paying mortgage loans. H1 commercial property sales in China were $31 bn, more than US and UK taken together. While many insist there are no bubbles due to burst in China, its citizens continue to save more than what its govt would like them to.

P&G, after having failed to fulfil its pharma ambitions, is selling its prescription drugs business to Warner Chilcott. Per square foot revenue of Apple’s Fifth Av store is twice that of Tiffany, Toyota is cutting its global cars output by ten percent, Boeing expects to deliver its first Dreamliner in 2010, and Sumitomo Mitsui of Japan is hiring bankers to form an investment banking unit. Facebook is expanding staff and Heineken has boldly raised prices, ignoring falling volumes. Nokia, which sold its PC business in 1991 is set to introduce a netbook laptop with a 12hr battery shortly.

About 18% of 80K employees of South African company Anglo American are HIV infected. While Mexico has legalised possession of drugs in limited quantities, Colombia, which supposedly supplies 80% of all cocaine sold in the US, has allowed American troops to fight drug traffickers on its soil.

Over ten million Japanese are using Docomo mobile phones for shopping and paying taxis and restaurants. When and how credit cards, banking and mobile phones will converge is anybody’s guess.

While Switzerland has managed to silence the US with a lollipop, Liechtenstein has decided to shun secrecy and even countries like Nigeria and India are moving to curb corruption in high places. A fundraiser who first raised money for Hillary Clinton and then for Obama has been arrested and a US judge has asked the govt to disclose details of those who have received emergency federal funding. That humans are by nature gamblers became clear when Americans lined up to buy $1 tickets that gave them a 0.0000006% chance of winning the $300 mn Mega Millions jackpot.

Russian President may soon have Buddhist monks advising him on spiritual matters, a pilot in Arizona is taking tourists 1500 ft up in the air in open airplanes for joyrides, a writer in Cuba keeps herself busy full time writing love letters for others, and IKEA’s large format stores in Beijing have become relaxation spots for the Chinese who enjoy free soft drinks in air-conditioned comfort, without buying much.

The concept of vertical farming (hydroponic) is in the news again, and some are talking about forests of artificial trees that would soak up carbon emissions. Reflecting solar radiation back into the space is being studied.

Wear white shirts. Sales around the globe are up because office goers now feel uncomfortable in bold stripes and prints. With Angela Merkel exhorting females to ask their bosses to pay them equal salaries, flirtation with female colleagues is passé anyway.

xxxxx