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Nov 29, 2009

U.K. Economy Shrank less than Forecasted

U.K. Economy Shrank Less Than Previously Estimated
Published: 11/25/2009 9:42:18 AM    By: TradingEconomics.com, Bloomberg

The U.K. economy shrank less than previously estimated in the third quarter as consumer spending stopped falling and the service industries slump eased, bringing the longest recession on record closer to an end.

Gross domestic product fell 0.3 percent from the previous three months, compared with a prior measurement of a 0.4 percent drop, the Office for National Statistics said today in London.
Prime Minister Gordon Brown this week called for stimulus to stay in place to avoid “choking off recovery” as an election looms within six months. The Bank of England has expanded its bond-purchase plan three times since March to ensure Britain’s escape from recession and Governor Mervyn King said yesterday the pickup isn’t “particularly strong.”
The U.K.’s recovery has lagged behind that of the U.S. and the euro area, which have both returned to growth. Data yesterday showed Germany’s economic growth accelerated in the third quarter, while the U.S. economy expanded at a 2.8 percent annual rate, less than the government reported last month.
Consumer spending was unchanged in the third quarter, the first time it hasn’t dropped in 1 1/2 years. Government spending rose 0.2 percent, while fixed investment fell 0.3 percent, the statistics office said.
Inventories fell by 4.1 billion pounds ($6.8 billion), the fourth consecutive decline. The slump in inventories is now the biggest on record, the statistics office said.
Officials revised up the GDP data because the decline in services output was smaller than previously estimated, at 0.1 percent instead of 0.2 percent. Manufacturing dropped 0.1 percent, up from the prior measurement of 0.2 percent.
Unemployment rose at the slowest pace in 18 months in October, retail sales climbed for a second month and the inflation rate increased more than expected, to 1.5 percent. The bank aims to keep inflation at 2 percent.

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November 29


Which of the “Rich Four” Countries Will Default First? By Martin Hutchinson
Contributing Editor

Money Morning
Volume in the credit default swap market for rich countries has soared and so have credit spreads, according to a recent Financial Times story, while volume in emerging markets CDS has stagnated. In other words, traders are betting against the governments with high budget deficits, like Britain and the United States, as well as against those with high debt levels, like Japan and Italy.
So is there really a substantial chance of a big rich-country default, and what would it look like if it happened?
It’s not obvious which of the “Rich Four” countries would go first.
Japan, for instance, has the highest debt. But Japanese consumers are such great savers that they essentially owe almost all of the debt to themselves.
The country needs fiscal discipline and higher interest rates (to reward Japanese savers properly), but there’s a decent chance Japan will get both, in which case default is unlikely.
Italy has high debt – at about 120% of gross …

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GATA DISPATCHES

James Turk: With much volatility, gold at $1,200-$1,400 by year-end

9:35p ET Saturday, November 28, 2009
Dear Friend of GATA and gold:
GoldMoney founder and GATA consultant James Turk has posted his latest gold price prediction: $1,200 to $1,400 by year-end but with great volatility and likely a dip this week to test support at around $1,150. You can find Turk's analysis at the Free Gold Money Report Internet site here:
http://www.fgmr.com/gold-november-25-2009-usd1200-usd1400-yearend-foreca...
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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