US Treasury Secretary Larry Summers raises spectre of second dotcom bubble

America may be facing a second dotcom bubble, according to former US Treasury Secretary Larry Summers.

His warning came as shares in professional networking site LinkedIn surged for a second day in New York.

Shares in LinkedIn, the world's largest professional networking site, jumped more than 10pc on Friday after more than doubling on their first day of trading on the Nasdaq on Thursday.

The flotation of LinkedIn, whose investors include Sequoia Capital, an early investor in Apple and Google, had been eagerly anticipated as the first of a slew of offerings that many expect to culminate in Facebook listing. At its peak price on Friday, LinkedIn was valued at $10.1bn (£6.2bn), or almost 27 times its projected sales for this year. Using the same multiple, Facebook would be worth just over $107bn.

"Who could have imagined that the concern with respect to any American financial asset, just two years after the crisis, would be a bubble?" asked Mr Summers at a conference in Beijing, according to Bloomberg. The chief economic adviser tp President Barack Obama during 2009 and 2010 added: "Yet that concern is increasingly raised with respect to American technology."

Reid Hoffman, LinkedIn's founder and chairman, now has a stake worth $1.8bn in a company that made profits of just over $2m in the first quarter of the year. While anyone can create a profile on the site for free, LinkedIn says that half of its $93.9m of first-quarter sales came from the subscription services it offers recruitment companies who use the site to help match candidates to jobs. About 30pc of the company's revenues were generated from advertising. (read more)

Greece suffers fresh blow as credit rating cut by Fitch

Greece has had its creditworthiness slashed by Fitch, one of the world's top three ratings agencies, in another blow to efforts to get the country's finances back on track.

Fitch said that the downgrade reflected the massive challenges the country faces in implementing cuts, tax rises and other reforms needed to secure its solvency.

Investors took flight as the rating of the Greek government's debt moved three notches further into 'junk' status, at 'B+'. The spread between 10-year Greek and German government bond yields, a gauge of the risk of holding Greek debt, touched a record 13.73 percentage points.

Fitch said its revised rating assumes that Greece, already the recipient of a €110bn (£96bn) bail-out from the EU and International Monetary Fund (IMF) will receive "substantial new money", allowing it to avoid a debt restructuring – where bondholders are paid later or less than the amount owed.

However, more downgrades could follow if the country's international rescuers do not offer a credible plan for the country, the agency said.

The warning came as the IMF urged Europe to offer more support to its struggling nations. "The countries cannot do it alone," said Ajai Chopra, the head of the IMF mission in Ireland. (read more)

May 21st Doomsday Cult worth $72 million, and collected $20 million in donations in 2009 alone -- still open for business despite Judgement Day

By now, you've probably heard of the religious group that's predicting the end of the world starts this weekend.

Harold Camping and his devoted followers claim a massive earthquake will mark the second coming of Jesus, or so-called Judgment Day on Saturday, May 21, ushering in a five month period of catastrophes before the world comes to a complete end in October.

At the center of it all, Camping's organization, Family Radio, is perfectly happy to take your money -- and in fact, received $80 million in contributions between 2005 and 2009. Camping founded Family Radio, a nonprofit Christian radio network based in Oakland, Calif. with about 65 stations across the country, in 1958.

But not even all of his own employees are convinced that the world is ending on Saturday.

In fact, many still plan on showing up at work on Monday.

"I don't believe in any of this stuff that's going on, and I plan on being here next week," a receptionist at their Oakland headquarters told CNNMoney.

A program producer in Illinois told us, "We're going to continue doing what we're doing."

According to their most recent IRS filings, Family Radio is almost entirely funded by donations, and brought in $18 million in contributions in 2009 alone. (read more)

Was Dominique Strauss-Kahn Trying to Torpedo the Dollar?

It's all about perception management. The media is trying to dig up as much dirt as they can on Dominique Strauss-Kahn so they can hang the man before he ever sees the inside of a courthouse. It reminds me of the Terry Schiavo case, where devoted-husband Michael was pegged as an insensitive slimeball for carrying out the explicit wishes of his brain-dead wife. Do you remember how the media conducted their disgraceful 24 hour-a-day Blitzkrieg with the endless coverage of weepy Christian fanatics on the front lawn of the hospital while Hannity, Limbaugh and O' Reilly fired away with their sanctimonious claptrap?

And now you're telling me that that same media is just "doing their job?"

Give me a break.

Whoever wants to nail IMF chief Dominique Strauss-Kahn has really pulled out all the stops. Their agents have been rummaging through diaries, hotel registries, phone records, yearbooks, yada, yada, yada. The UK Telegraph even paid a visit to a high-priced DC knocking shop to get a little dirt from Madame Botox; whatever it takes to make a randy banker look like the South Hill rapist. And they're doing a pretty good job, too. The cops have made sure that the "Great Seducer" always appears handcuffed and dressed in a "pervie" raincoat with 3-days stubble before they parade him in front of the media. On Wednesday--more grist for the mill--they released his mug-shot, an unflattering, deadpan photo that makes him look like Jack-the-Ripper. Was that the intention?

And, that's not the half of it. The Big Money is exhuming every woman he's ever had contact with for the last 30 years hoping they can glean some damning tidbit of information that will convince the doubters that beneath that sophisticated manner and $25,000 suit lurks a closet Bluebeard ready to snap up your daughters and defile your wives. Next thing you know, they'll be trotting out Paula Jones and Tanya Harding claiming they spent a torrid night with the Marquis de Kahn in a trailerpark outside Winamucca.

Where does it stop? Or does it stop? Are we in for another year-long Clinton-Lewinski feeding frenzy where everyday we hear more lurid details about the sexploits of people who don't really interest us at all? (read more)

BREAKING NEWS: George Soros sells entire holding in gold as panic sets in over imminent gold bubble burst

George Soros, the hedge fund investor who called gold "the ultimate bubble", has sold almost his entire holding of the precious metal, leading to fears that the price is about to fall.

The investor, famous for his £10bn bet against the Bank of England in 1992, made his "ultimate bubble" remark in January last year but acted to cut his holding only in the first quarter of this year.

Holding on has proved hugely profitable – in January 2010 gold was trading at about $1,100 an ounce, whereas the lowest price during the first three months of 2011 was more than $1,300. The highest was about $1,450.

It is not known exactly when Mr Soros sold his gold, which was held via the Soros Fund Management investment vehicle. Filings to the Securities and Exchange Commission (SEC), the American regulator, showed that he had sold 99pc of his holding in SPDR Gold Trust, an exchange-traded fund (ETF) backed by gold bullion, by the end of March.

The New York-based fund sold its entire holding in iShares Gold Trust, a similar investment. But Mr Soros bought shares in two mining companies, Freeport-McMoRan Copper & Gold and Goldcorp.

This may have been a smart move. "As the precious metals rally ends, you'll get transition toward related equities," James Dailey of Pennsylvania-based Team Financial Asset Management, told Bloomberg. "You don't see any speculative appetite for gold stocks yet." (read more)

European Central Bank threatens to pull the plug on Greek lending

The European Central Bank has threatened to stop lending to banks using Greek government bonds as collateral if Athens changes the terms of the debt, a move which could bring down the country's banking system.

The eurozone's central bank has played its "last card" in an attempt to prevent the debt restructuring it fears, said analysts. The cost of insuring Greek sovereign debt rose to more than €1.33m to protect every €10m of bonds as the threat laid bare the divisions in Europe over how to resolve the crisis.

The Mediterranean nation is struggling to carry out the reforms agreed under its €110bn EU/IMF bail-out, prompting fears Athens will not be able to repay its debts, currently totalling about €340bn.

EU officials have been floating the idea of a "soft" restructuring of the debt, whereby the holders of the bonds see the terms extended.

However, Juergen Stark, ECB chief economist, said that if the country altered its repayment terms, the eurozone's central bank would not be able to lend to Greek banks putting up government bonds as collateral.

"A sovereign debt restructuring would undermine the eligibility of Greek government bonds," he said. "A continuation of liquidity provisions would be impossible." (read more)

Is the Gold/Copper Ratio Predicting A Drop In the S&P?

People are always talking about the silver/gold ratio—but the copper/gold ratio seems to be much more predictive of market trends.

My friend Michael Hampton has this very interesting chart—check it out.

The top chart is a ratio of copper-to-gold prices. The bottom chart is of the S&P index. If you notice the timeline, you’ll see the chart covers the last three years.

The red circle 1 is when the copper/gold ratio turned down—followed shortly by a turn down in the S&P index which [sarcasm alert] we all have such fond memories of. The subsequent green circle in the ratio—the bottom of the ratio—came shortly before the uptick in the S&P from its bottom of 666.37.

Similarly, red circle 2—the downturn in the copper/gold ratio—signaled the top of the market in the S&P. However, the subsequent green circle anticipated the bottom of the S&P by about six weeks.

Now, at red circle 3, there is a clear break down in the ratio.

Does this signal a break down in the S&P? (read more)

439,000 US Jobless claims as 4-week average moves to six-month high

New U.S. claims for unemployment benefits fell more than expected last week, but a rise in the four-week moving average to a six-month high indicated the labor market recovery will remain painfully slow.

Initial claims for state unemployment benefits fell 29,000 to a seasonally adjusted 409,000, the Labor Department said on Thursday, continuing to unwind the prior weeks spike.

Economists polled by Reuters had forecast claims dropping to 420,000. The prior weeks figure was revised up to 438,000 from the previously reported 434,000.

The four-week moving average of unemployment claims, a better measure of underlying trends, rose 1,250 to 439,000 - the highest level since mid-November.

The data covers the survey period for the governments closely watched employment report for May, which will be released early next month.

The recent jump in claims, blamed on auto layoffs because of supply chain disruptions from March's Japanese earthquake and problems with adjusting data for seasonal variations, had raised fears of a pull back in the pace of job creation. (read more)

In China, some new cities are ghost towns -- is the Chinese real estate bubble about to burst?

In China's Inner Mongolia, Kangbashi district offers residents "new modern" living, with tree-lined streets, shiny apartment buildings, vast parklands, restaurants and even a motor racing track.

But seven years after construction workers broke ground on the arid plateau, most of the apartments appear empty and the wide streets are almost deserted -- earning Kangbashi the tag of "ghost city".

The new section of Ordos city on the edge of the Gobi desert was designed to accommodate about 300,000 people but residents say fewer than one-tenth of that number live in Kangbashi. Estate agents insist the number is much higher.

New districts like Kangbashi are springing up across China as the world's second-largest economy undergoes an unprecedented urbanisation process with hundreds of millions of people heading to fast-growing metropolitan areas.

Ordos is part of a nationwide building boom that has been fuelled by a massive credit binge, raising fears of a real estate bubble and a potential explosion in bad debts, especially among local government investment vehicles.

In the northern port city of Tianjin, the government is building an "eco city" covering 30 square kilometres (11.6 square miles) of non-arable salt pans and former fishing villages that can accommodate 350,000 people.

Near the southwestern city of Kunming, authorities started developing a new district for nearly one million people in 2003 but the area is reportedly still largely empty.

"These sorts of towns raise the question -- does the government have some amazing vision for filling these cities... or are they just great white elephants that are wasting public funds?" Rupert Hoogewerf, founder and compiler of the Hurun rich list, told AFP. (read more)

Brazil's disappearing favelas: Sporting world's most powerful corporate interests render families homeless in Brazil

In Chile, it was called the The Brick. It was the many-thousand page economic manifesto of Dictator Augusto Pinochet, written by "the Chicago Boys" - Chilean exchange students from the University of Chicago. Disciples of the university's conservative, neoliberal economics professor Milton Friedman, they printed The Brick on "the other 9/11" - September 11th, 1973. As Chile's Presidential palace was being bombed, "Companero Presidente" Salvador Allende was being murdered, and General Pinochet was assuming power, The Brick became Pinochet's economic compass. It guided the country through two decades of slash and burn privatisation, displacement, and inequality - all in the name of "development".

Today Pinochet is reviled and gone, but The Brick has become a default manifesto for much of the globe. Today, it's most ardent sponsors ironically bear its name as an acronym: BRIC. They are Brazil, Russia, India, and China. These ambitious nations have established themselves as the future, not only of global economic growth, but as future centres of international sport. They can offer two things that the decaying, Western powers can no longer provide: massive deficit spending and a state police infrastructure to displace, destroy, or disappear anyone who dares stand in their way.

We are seeing this in particularly dramatic form in Brazil. The country will be hosting both the 2014 World Cup and the 2016 Summer Olympics. In the 21st century, these sporting events require more than stadiums and hotels. The host country must provide a massive security apparatus, a willingness to crush civil liberties, and the will to create the kind of "infrastructure" these games demand. That means not just stadiums, but sparkling new stadiums. That means not just security, but the latest in anti-terrorist technology. That means not just new transportation to and from venues, but hiding unsightly poverty from those travelling to and from the games. That means a willingness to spend billions of dollars in the name of creating a playground for international tourism and multi-national sponsors.

Every day in the favelas, the slums that surround Brazil's major cities, these international athletic festivals are vividly recalling the ways of The Brick. Amnesty International, the United Nations, and even the International Olympic Committee - fearful of the damage to their "brand", are raising concerns. It's understandable why.

This week came a series of troubling tales of the bulldozing and cleansing of the favelas, all in the name of "making Brazil ready for the Games". Hundreds of families from Favela de Metro find themselves living on rubble with nowhere to go after a pitiless housing demolition by Brazilian authorities. By bulldozing homes before families had the chance to find new housing or be "relocated", the government is in flagrant violation of the most basic concepts of human rights. (read more)

What the world eats: Time Magazine's Startling Expose from "The Hungry Planet"

The following series of photo essays are not new, and are from the book entitled "The Hungry Planet" featured by Time Magazine. They are worth posting, however, as rising food prices steadily bring revolution to country after after country around the globe, as millions starve while millions others are too fat to leave their couches, and as droughts and toxic processed foods endanger human health and existence.

While observing these three photo essays, please take note of the following things:

1) The quantity of food possessed in the developed countries compared to the underdeveloped countries;
2) The quality of food that the two poles possess, such as the amount of boxed, bagged, processed and "fast" food that appear in the developed diets as opposed to the wholesome meats, vegetables and fruits that dominant the diets of the underdeveloped nations;
3) The markets available to the two poles, consisting of shelves of boxed, bagged and processed food in the developed markets, and basic, wholesome ingredients in the open air markets of the developing world.

The Hungry Planet: What the World Eats, Part I
The Hungry Planet: What the World Eats, Part II
The Hungry Planet: What the World Eats, Part III

Japan's economy falters further and enters recession as the other shoe begins to drop

Japan's economy, sputtering since the March 11 earthquake, tsunami and nuclear disaster, has fallen into recession, according to government figures released Thursday.

The country's gross domestic product fell by an annualized rate of 3.7% in the first quarter of the calendar year, according to the government, a much steeper fall than Japanese economists had predicted.

Comparing the first quarter to the previous year, according to Japan's cabinet office, the GDP fell 0.9%. In the fourth quarter of 2010, the GDP fell 0.8% as compared to the same quarter of the previous year. Thursday's GDP figures show a second consecutive quarterly drop, which fits the economic definition of a recession.

Industrial output in March was down 15.3%, the worst monthly drop in the country's history.

Businesses in the region affected by the tsunami were hit hard, with 10,000 of 24,000 businesses affected and 600 expected to close.

The figures, which did not include data from tourism or trade, underscore the fact that the natural disaster of March has become an economic disaster. (read more)

US government seizes pension fund, invades Pakistan -- all in a week's work

There are certain times in life when a man is faced with overwhelming adversity… times when he has no reason to adhere to society’s norms anymore. It is in these instances that the true quality of his character comes shining through.

One of these situations is when he’s broke. Dead, flat broke. Some people, even when staring deep into their own financial abyss, still hold to their moral principles, honor their obligations, and keep their word.

For others, the boundaries of morality are quickly blurred into shades of gray, and things like fraud, thievery, and deception become perfectly legitimate tactics in their minds.

Speaking of broke, faced with what is tantamount to the official insolvency of the United States of America, policymakers have opted to seize funds from the retirement accounts of public sector workers in order to keep the government running.

Wow. America’s leaders are willing to engage in cannibalistic thievery in order to continue funding government operations. I wonder what sorts of operations are so important that they are willing to steal from their own people in order to finance? Any ideas?

Apparently, starting a shooting war in Pakistan was at the top of their list.

In the most insulting, disingenuous display of insensitivity and lack of regard following such a momentous financial decision, the US Defense Department decided to send helicopters into western Pakistan in a search for more ghosts. Pakistani military fired on the choppers, and the choppers fired back.

Seems like a good use of confiscated funds, no? (read more)

MATT TAIBBI: Goldman Sachs Executives Lied To Their Customers And Congress

Matt Taibbi, the Rolling Stone writer who labeled Goldman Sachs a "vampire squid" in one of the defining stories of the financial collapse, has written another article on the Wall Street firm.

This one is potentially more devastating.

Taibbi argues that Goldman Sachs executives lied when they testified in front of Congress in the aftermath of the crisis. Unlike other commentators who grouse about how Wall Street execs should be tossed in jail, Taibbi actually provides specifics. He takes quotes from some of the Goldman execs who testified, including CEO Lloyd Blankfein and CFO David Viniar, and then juxtaposes them with what he believes to be the truth at the time.

And at least as Taibbi tells it, the statements do appear to be misleading, if not outright false.

One of the biggest frustrations most people have about the financial crisis is that no one has yet been held accountable for it. In prior crashes--the S&L collapse, the 1987 crash, the dotcom bubble--prosecutors had a field day parading villains in front of TV cameras. And yet, this time, despite the financial crisis ushering in the worst recession since the Great Depression, no big shots have gone to jail. (read more)

US Postal Service four months away from default

The U.S. Postal Service will begin to default on its financial obligations just over four months from now unless Congress takes action to relieve it of its obligation to pre-fund retiree health care accounts, its leader told lawmakers Tuesday.

USPS expects to post a net loss of $8.3 billion for this fiscal year, nearly as much as it lost last year. And with its $15 billion debt limit due to be reached this year, more borrowing is not an option, Postmaster General Pat Donahoe said in testimony before a subcommittee of the Senate Homeland Security and Government Affairs committee.

"Despite our aggressive cost cutting and revenue generating efforts, we are in serious financial predicaments today," he said. "As things stand, we do not have the cash to make the $5.5 billion prepayment for future retiree health benefits due on September 30. And we may be forced to default on other payments. This could extend to operational expenses."

USPS contends the prepayment for future retirees is a financial obligation that none of its competitors, nor any government agency, has to live with. The requirement came along with a 2006 postal reform bill that was passed when mail volume was at its peak.

Officials say the payments were also based on what was then a much larger employee base. USPS has cut its workforce by 113,000 since then. Donahoe said in written testimony to the subcommittee on federal financial management that not only can USPS not afford the future retiree health bill this year, but that without Congressional action, it's inevitable that the organization will eventually default on payments to employees and suppliers as well. (read more)

US Secretary Timothy Geithner: not only is American financial system not too large to go bust—but it's headed for another crisis

At a New York screening of the new HBO adaptation of Andrew Ross Sorkin’s Too Big to Fail, Treasury Secretary Timothy Geithner said that not only is our financial system not too large to go bust—but we’re headed for another crisis.

The Wall Street meltdown of late 2008 was, in real life, a harrowing event, triggering a terrible recession from which we’re still recovering. In the HBO movie Too Big to Fail, it’s also a surprisingly gripping melodrama—a clash of greedheads and egomaniacs desperate to escape the consequences of their own bad behavior.

At various moments of high tension, Treasury Secretary Hank Paulson (played by a bedraggled, unshaven William Hurt) flees an important meeting to stress-vomit in his private bathroom, and New York Federal Reserve President Timothy Geithner (a perfectly turned-out Billy Crudup) continually curses into his cell phone.

It’s an alarming entertainment (premiering May 23 at 9 p.m.), and an even more disturbing memory. So having the real Geithner predict the coming of another big crisis was the last thing the well-heeled screening crowd at the Time Warner Center wanted to hear Tuesday night.

“It will come again. There will be another storm,” warned Geithner, who in early 2009 succeeded Paulson as treasury secretary. “But it’s not going to come for a while.” (read more)

Is the next housing shock just around the corner?

The housing crash will be short-lived for America's politicians

President Bill Clinton once described homes as something Americans "will always know that their country wanted them to have because they were entitled to it as part of the American dream".

t's how the 42nd president ended an address in The White House extolling the virtues of homeownership. He gave the speech in 1995, a year like most before it and several since, when US politicians were more than happy to talk about the housing market.

Fast forward 16 years and the relative silence is striking. More than three years since the collapse of Bear Stearns – a bank that choked on mortgage debt – the only financial debate in the capital is how to cut the country's $14 trillion (8.6 trillion) debt.

Meanwhile on Wall Street, the housing market has become the D-list celebrity of financial markets. It has to do something really shocking to get attention. The steepest quarterly drop in house prices since the three shuddering months after Lehman Brothers' demise certainly isn't enough. US stock markets didn't blink at Monday's news that average prices fell 3pc in the first three months of this year. Nor that only three of the 132 metropolitan areas escaped the declines, according to Zillow, a major property listings website. (read more)

Is East Africa ready for its own 'Euro?'

Just as the eurozone is being threatened by faltering economies, East Africa is moving closer to its own monetary union. But some are asking if it's ready for a common currency, and in light of Europe's troubles, if it should even have one.

Under an ambitious plan, Kenya, Uganda, Tanzania, Rwanda and Burundi are targeting 2012 for adopting a common currency.

Having already established a customs union in 2005 and a common market in 2010, the five member-states of the East African Community (EAC) hope that the economic integration will boost regional trade, decrease exchange-rate volatility, and attract foreign investors.

Dr Richard Sezibera, the recently-appointed Secretary General of the EAC, says: "The financial, fiscal and monetary integration is good for our region.

"It will help our region improve its competitiveness, deal with volatility that has been a problem in our region, lead to an easing of business -- including easier capital flows from within the region -- and make the financial integration much easier.

"This is beneficial both to business but also to the average East African."

The promise of a better financial outlook in an integrated market of more than 130 million people has not gone unnoticed by the world's strongest economies.

Earlier this week, China became the latest state to appoint a representative to the EAC secretariat, following the example of countries such as the United States, the United Kingdom and France. (read more)

Thousands protest economic crisis, high unemployment in Spain -- coming to a city near you?

Protests against Spain's economic crisis took a new turn Wednesday as social media networks fueled calls for demonstrators to take to the streets before local elections a few days away.

Thousands returned late Tuesday to Madrid's central Puerta del Sol plaza -- where the main protests began Sunday.

A few hundred demonstrators camped out there overnight, while similar but smaller protests were held in Barcelona and other Spanish cities, a protest organizer said.

"The economy and unemployment are key to the protest because that binds all of us together," said Jon Aguirre Such, a spokesman for the Real Democracy Now, one of many groups convening the demonstrations.

"In this crisis, while some have gotten rich, most people have less income," Aguirre said.

Demostrators are protesting Spain's 21 % unemployment rate and a record 4.9 million jobless.

Protesters say a plethora of temporary labor contracts offer few or no job benefits. In addition, some are protesting against the political and financial establishment that they say is to blame. (read more)