Eurozone split in the air, US and China unhappy with each other, indices plunging, dollar bursting at seams, and oil showing signs of meekness, if not weakness. A very eventful week.

The world, financially and politically, suddenly seems to have become fragile. US and China are hardening their stances on non-issues like RMB’s value and arms to Taiwan while Europe seems as inconsequential as Peru or Ghana. Moody’s has warned US on its sovereign rating, equities indices have plunged steeply, savings rate is rising, home ownership and home prices are falling, exports are declining and unemployment is rising. No matter how many vows Obama takes, the fact is US is limping while China is jogging; controls on salaries and elaborate checks on derivatives trading cannot fix problems like penchant for junk food and the resultant obesity, and the habit of driving a thousand kilometers every week end.

Global financial markets started debating if euro would survive, questioning economic status of Greece, Spain and Portugal, and the euro tumbled, leaving one wondering if it was a dip or a fall off the cliff. This, despite the euro zone having no current account deficit, a savings ratio of 15.8% and largely steady retail sales, though 17% of EU population is reportedly facing risk of poverty.

France had a trade deficit of $59 bn in 2009, Spain is trying hard to make landlords pay taxes on rent income, South Korea clocked a current account surplus of $43 bn last year and is working to preserve its status as the world’s largest shipbuilder, North Korea’s Kim Jong has started visiting factories to revive the economy, Iraq has sealed ten major deals to resurrect its oil industry, the latest being with Lukoil (Russia) and Statoil (Norway), China now has 120 mn electric bicycles, Hong Kong seems to be steady, and Brazil opened a 87 mw ethanol power plant last week.

Ecuador’s share in world drug trade rose last year while retail sales in Estonia, Latvia and Lithuania plunged 16.4%, 30.2% and 27.2%, respectively, in 2009.

Ills of excessive globalization of the financial industry are beginning to receive attention, though opposing sounds are still quite muted. One typical example is S Korea, which saw a net capital outflow of $50 bn in 2008 and a net inflow of $26 bn in 2009. How do small nations manage their currencies and businesses? How do they plan for the future? When one lends money, one looks at the borrower’s credibility, not at innovative hedge deals to reassure repayment.

Google is planning an online software store where outside developers would be welcome, Amazon has agreed to up prices of electronic editions of Macmillan books, uncertainties about Apple’s iPad tablet are continuing, and AOL’s performance continues to slide.

Kraft is finally home with Cadbury. Will it go for GM cocoa and alter the taste of chocolates the world over? Pepsi sales in volumes in US and EU remained flat last quarter and fell 5% in Mexico. Esprit of Hong Kong has shifted focus on Asia as sales in Germany have slumped. Singapore Airlines successfully cut fuel consumption by 10 tons in its LA-Singapore flight last week with good maintenance and better planning.

Drug majors Pfizer, Roche and AstraZeneca seem to be holding on well, though there are worries about competition from generics. Shell has struck a deal with Cosan for a $21 bn ethanol JV, though its profits plunged 75% in Q4; profits of Chevron and ExxonMobil’s dropped 37% and 25%, respectively, because of weak demand for refined products.

GMAC lost USD 5 bn last quarter because of huge write downs, DriveTime, lending auto loans to the normally unqualified, is raising $1 bn from an IPO, and Citi’s PE unit is up for sale.

BAE systems has agreed to pay over $400 mn in fines for bribes paid for sales to Saudi Arabia, Tanzania and elsewhere, British Airways revenue per passenger fell 8.8% in Q3 and non-premium traffic was down 7.9% in Jan.

Germany has again officially bought stolen data of tax dodgers, sending shivers down the spines of Switzerland, Liechtenstein, Luxembourg and Cayman Islands. Latvia has sold an entire town (11 residential blocks, a shopping centre, etc.) for $3 mn.

Researchers say US could be spending $344 bn because of obesity related healthcare by 2018 and excessive netsurfing causes depression. A Harvard research says business meetings at fancy resorts and normal offices lead to different decisions on the same issues, by the same people.

UK is planning to ban branding of cigarettes, to cut smoking by half, and to check drunks attacking people with broken beer bottles, it has started using shatterproof pint glass. Obviously, US has not been consulted; otherwise it would have unveiled some fiscal measures for solving these problems.

A church in Poland has started recording attendance with fingerprints, about 100 women in seven countries have forbidden themselves from buying any clothing for a year, the Chinese sent 784 bn short messages in 2009, and parking in Beijing can cost up to $1.5 an hr. While Washington is busy removing snow, Vancouver is depositing it on a melting mountain. A warmer Arctic is already costing the world somewhere between USD 60 and 370 bn and the cost may exceed 2.5 tn by 2050.

Political leaders around the world are stubbornly refusing to see the writing on the wall. Australia wants to address the problem of ageing of its population through some economic reforms! There is a saying in the East – as one grows older, one needs to eat less to keep going.

Where will equities and currencies go next week and the week after? Never mind. In the immediate term, the financial world is going to keep demanding a tax on whatever you spend on your food, clothing or shelter. All you can do is try to strike forward deals with your favorite grocery store.

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