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International Economy:
Greeks and Italians are taking their money and running, moving it abroad or even burying it underground for fear the euro zone crisis will topple banks and wipe out what remains of their savings.
Bankers in Greece say worries about the resilience of local banks, coupled with a rise in burglaries, has helped trigger a surge in demand for safe deposit boxes for those who have yet to set up accounts outside in the country.
Some are even building their own. "There has been a big increase in rentals of safe deposit boxes, about fivefold compared with last year," said one banker at a large, foreign-owned bank. "About 10 percent of the withdrawals we see are headed there." "The most extreme case was a client who told me he was building a safe under his pool."
With ordinary Greek grandmothers now joining the wealthy in seeking sanctuary from economic chaos, banks have embarked on an interest rate war, with some smaller institutions sweetening terms to up to seven percent to woo customers.
The crisis engulfing Greece has already forced Ireland and Portugal to seek bailouts. It now also threatens the efforts of Italy, the currency bloc's third largest economy, to raise 450 billion euros ($584 billion) to finance its debt burden this year.
Ordinary Italians are also losing trust in local banks. Some have sought a safe haven over the border in Switzerland, while others are putting their faith in the relative stability of euro zone leader Germany.
A manager at a top asset management group in Bologna conceded that "dramatic" media coverage had worried people, adding that large clients had placed cash in safes and that deposit boxes in the area now had "no spare capacity."
Markets:
So much gray hair. So little to show for it.
The major U.S. stock indexes may not have gotten very far in 2011-the Dow Jones Industrial Average is up 6.2% for the year and the Standard & Poor's 500 stock-index is up less than 1% -but there was plenty to keep investors interested all year long. Geopolitical upheaval, natural disasters, sovereign-debt crises and credit-rating downgrades competed for the market's attention. These forces whipped stocks around to a degree not seen since the financial crisis three years ago.
Between August and November, in particular, investors lurched from full-on buying to full-on selling on a near-daily basis, with the Dow industrials swinging an average 269 points a day. In early August, the Dow alternately rose and fell by 400 points or more for four days in a row-an unprecedented run that encapsulated the fickleness of 2011 for many market watchers.
"This year was a year where you had to be willing to switch gears at any moment," says Scott Redler, chief strategic officer at T3 Trading Group.
Throughout the year, the Dow bobbed above and below 12000, a level that served roughly as the market's fulcrum. Investors struggled to balance relatively cheap stock valuations and continued profit growth against fears of a Europe-induced contagion reminiscent of the fallout from the collapse of Lehman Brothers Holdings Inc. in 2008..
Investors largely expect that dynamic to remain in place for 2012, potentially laying the groundwork for another year of frustrating volatility.
Energy:
At times politicians, bloggers, and even financial professionals make comments about US domestic and global energy issues that are factually inaccurate. When you are having a cocktail, ask around what people think about energy dependence, production, global supplies, etc. and you may hear some of the following six myths:
Note: wherever units are not provided, the assumption is million barrels per day
Myth #1: US crude oil comes from the Middle East/Persian Gulf.
Not true. A large portion of imports is coming from Canada and other non-OPEC nations. Only about 18% is coming from the Persian Gulf
Myth #2: The US domestic energy production continues to dwindle.
Not true. The US domestic energy production is in fact increasing.
Eurasia Review: Oil extracted from shale deposits in North Dakota, Montana, and Texas has reversed years of decreasing American oil production, leading to increased domestic extraction and thus reducing dependence on overseas oil from 60 percent of U.S. consumption in 2005 to a little less than half now.
Myth #3: If the US produced more of its energy requirements, the price at the pump would be lower.
This is a common misconception and is not true in the global economy.
Eurasia Review: ... it would not matter much if the United States produced 100 percent of what it consumed or whether it all came from the Persian Gulf, because the price at the pump is determined by the worldwide oil market. If more oil is put on market from anywhere around the globe, the price will go down; similarly, if oil production is cut anywhere in the world and not offset by increases elsewhere, the price will go up.
Myth #4: US energy needs are constantly growing.
Not true.
WSJ: U.S. customers have been pulling back in part because an anemic economic recovery has left millions still looking for work. In August, U.S. drivers burned 7.7% less gasoline than four years earlier, when gasoline usage peaked.
Here is a chart showing the US energy consumption for the past three years (see the attached EIA document for more detail).
Myth #5: The US is not an energy exporter because it has no excess energy to export.
This is true on a net basis (imports less exports), but just the energy exports have been on the rise.
In particular the US exports a great deal of coal and refined products because of efficient refining capabilities:
With higher exports, the net imports (imports minus exports) have been declining:
Myth #6 - this one will get the conversation really going: World's oil production has already peaked and as the reserves dwindle, more wars will be fought over the scarce energy resources.
Not true.
Eurasia Review: First of all, "experts" have been repeatedly predicting the depletion of the world's oil reserves since the late 1800s, but it never seems to happen. New technologies and periodic higher prices make previously uneconomic deposits viable-such as the tar sands and shale oil that have recently become economic-thus sustaining world production. Second, academic research has indicated that conflicts are much more likely over allocation of money received from abundant natural resources (for example, fighting in Nigeria over who gets proceeds from oil exports) than conflict over scarce resources that can be priced in a market. That is, it is cheaper to pay the market price than to go to war.
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