The Usual Suspects

02/18/2010 12:00 pm EST


Igor Greenwald

Chief Investment Strategist, MLP Profits

World markets soared this week after the European finance ministers gave Greece the evil eye and a cold shoulder.

Or maybe it was the looming 40% haircut for Dubai lenders. Perchance the latest Chinese credit tightening should get some credit, too.

More likely, everyone was just relieved that, for a day at least, Wall Street had no need of foreign scapegoats. Why look abroad for those when the Goldman Sachs (NYSE: GS) black mages live next door? Those noted alchemists turned out to have helped Greece disguise its spendthrift ways with an off-the-balance-sheet loan seven years ago. This wasn't exactly a secret at the time, except perhaps to German politicians who would rather blame Goldman than justify a bailout of Athens to voters.

It was, of course, a German bank that ultimately bought the Greek deal from Goldman for a nifty short-term profit. German banks heavily exposed to Greek debt would be among the biggest beneficiaries of any bailout. All the more reason to consider a default. People are starting to ask why Greece should undertake draconian cuts when bigger nations in the same fix a year ago just kept right on borrowing. Among them are Greek customs inspectors and Finance Ministry workers, who have joined cab drivers on strike.

It's a bit harder than than that to walk off one's job in China, to the point where double-digit growth is causing inflation to creep up. Ignore the handwringing, urges Yiannis Mostrous, who expects China to keep prices in line. One way to do so would be by modestly revaluing the yuan, and speculation that it will do just that is growing. And if Beijing does boost the yuan, Mostrous' pick of a Hong Kong developer with a hot hand on the mainland figures to be an obvious and immediate beneficiary, along with the rest of China's property sector.

In a new Q&A, Paul Goodwin suggests another China real estate play, and notes that Beijing has every incentive to keep growth going and workers working.

With so much attention focused on China, India has been unjustly ignored and underowned in the West, writes Dr. Marc Faber. He's a fan of an Indian bank as well as a leading tech services supplier.

Meanwhile, Eoin Treacy likes the chart of a Canadian producer of the hottest commodity around: lumber. Perhaps lumber, too, is just a bubble. That's just a synonym these days for a price that's headed up.
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