Perspectives on the global economic meltdown

[vina]

Listen carefully , these are FACTs, not make believe .. and dont throw garbage about what you "saw" or "heard" from someone who came over in 1990 or whenever (then the avg US wage in IT was 36K or so).

Now youlisten carefully before rambling two paragraphs, I posted a story about how expats in India are losing their job to local work force when the economy starts going south. So if that is okay with you, how can you complain about a US senator asking to make sure that expats in US like H1/L1 visas be terminated first? Got it?

{deleted}

How about the fact that the expat got laid off because they are HIGH COST and NOT EXPAT !. I showed you how Indian Companies are doing the EXACT same thing by bringing back High Cost Expats and replacing them with cheaper Americans!.

But now, this {deleted} can connect only the words EXPAT and H1/L1 and jumps up like a Paki doing equal equal and that US companies should go against the law of the land and terminate H1/L1 first ahead of Green Card and Citizenship types (ie discriminate like his union based on citizenship status), irrespective of whether the H1 performs better , is more qualified and all the rest of it!. So much for basic fairness and natural justice. Thank goodness the US is a far better country than {deleted} would want to make it!.

[SriniY]

Xposting from Global Economy thread

Full text of Putin's Speech at Davos. Posting snippets from this. A very clear analysis of the economic slowdown. Real worth reading the full article.

Putin is a true patriot.

http://www.weforum.org/pdf/AM_2009/Open ... rPutin.pdf

There is a certain concept, called the perfect storm, which denotes a situation when Nature’s forces converge in one point of the ocean and increase their destructive potential many times over. It appears that the present-day crisis resembles such a perfect storm.
...
I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasised the US economy’s fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism. The time for enlightenment has come. We must calmly, and without gloating, assess the root causes of this situation and try to peek into the future.

This primarily concerns disproportions between the scale of financial operations and the fundamental value of assets, as well as those between the increased burden on international loans and the sources of their collateral.

The entire economic growth system, where one regional centre prints money without respite and consumes material wealth, while another regional centre manufactures inexpensive goods and saves money printed by other governments, has suffered a major setback.{Taking a dig at the US here}

And, finally, this crisis was brought about by excessive expectations. Corporate appetites with regard to constantly growing demand swelled unjustifiably. The race between stock market indices and capitalisation began to overshadow rising labour productivity and real-life corporate effectiveness.
Unfortunately, excessive expectations were not only typical of the business community. They set the pace for rapidly growing personal consumption standards, primarily in the industrial world.This amounted to unearned wealth, a loan that will have to be repaid by future generations. This pyramid of expectations would have collapsed sooner or later. In fact, this is happening right before our eyes.

* * *

We must not revert to isolationism and unrestrained economic egotism. The leaders of the world’s largest economies agreed during the November 2008 G20 summit not to create barriers hindering global trade and capital flows. Russia shares these principles. Although additional protectionism will prove inevitable during the crisis, all of us must display a sense of proportion. Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake.

True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent. The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation.

In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.
Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.{Hmmm, very interesting of Putin to say this.}

In our opinion, we must first atone for the past and open our cards, so to speak.
Second. Apart from cleaning up our balance sheets, it is high time we got rid of virtual money, exaggerated reports and dubious ratings. In effect, our proposal implies that the audit, accounting and ratings system reform must be based on a reversion to the fundamental asset value concept.

Third. Excessive dependence on a single reserve currency is dangerous for the global economy. Consequently, it would be sensible to encourage the objective process of creating several strong reserve currencies in the future. It is high time we launched a detailed discussion of methods to facilitate a smooth and irreversible switchover to the new model. {If the US dollar collapses,...}

This means that a system based on cooperation between several major centres must replace the obsolete unipolar world concept.

The only way to ensure truly global energy security is to form interdependence, including a swap of assets, without any discrimination or dual standards. It is such interdependence that generates real mutual responsibility.

I propose we start laying down a new international legal framework for energy security. Implementation of our initiative could play a political role comparable to the treaty establishing the European Coal and Steel Community.

It is necessary to return to a balanced price based on an equilibrium between supply and demand, to strip pricing of a speculative element generated by many derivative financial instruments.

To guarantee the transit of energy resources remains a challenge. There are two ways of tackling it, and both must be used. The first is to go over to generally recognised market principles of fixing tariffs on transit services. They can be recorded in international legal documents. The second is to develop and diversify the routes of energy transportation. We have been working long and hard along these lines.

However, unlike many other countries, we have accumulated large reserves. They expand our possibilities for confidently passing through the period of global instability.

The crisis has made the problems we had more evident. They concern the excessive emphasis on raw materials in exports and the economy in general and a weak financial market. The need to develop a number of fundamental market institutions, above all of a competitive environment, has become more acute.
We were aware of these problems and sought to address them gradually. The crisis is only making us move more actively towards the declared priorities, without changing the strategy itself, which is to effect a qualitative renewal of Russia in the next 10 to 12 years.

The world has lately come to face an unheard-of surge of violence and other aggressive actions, such as Georgia’s adventurous sortie in the Caucasus, recent terrorist attacks in India, and escalation of violence in Gaza Strip. Although not apparently linked directly, these developments still have common features.
First of all, I am referring to the existing international organisations’ inability to provide any constructive solutions to regional conflicts, or any effective proposals for interethnic and interstate settlement. Multilateral political mechanisms have proved as ineffective as global financial and economic regulators.
Frankly speaking, we all know that provoking military and political instability, regional and other conflicts is a helpful means of distracting the public from growing social and economic problems.

[Singha]

Third. Excessive dependence on a single reserve currency is dangerous for the global economy. Consequently, it would be sensible to encourage the objective process of creating several strong reserve currencies in the future. It is high time we launched a detailed discussion of methods to facilitate a smooth and irreversible switchover to the new model

Bravo!

once the US is deprived of the right to print extra money, its geopolitical leverage will take a serious nosedive.

[Neela]

My thoughts too. When Angela Merkel ran to St.Petersberg, it was pretty clear who has the upper hand whenit comes to energy security for Europe. Unkil messed it and messed it big time. Europeans are mighty pissed off. And Putin now is just goading a little bit. When the crisis deepen next year, his voice will get louder!

[markos]

How about the fact that the expat got laid off because they are HIGH COST and NOT EXPAT !. I showed you how Indian Companies are doing the EXACT same thing by bringing back High Cost Expats and replacing them with cheaper Americans!.

But now, this {deleted} can connect only the words EXPAT and H1/L1 and jumps up like a Paki doing equal equal and that US companies should go against the law of the land and terminate H1/L1 first ahead of Green Card and Citizenship types (ie discriminate like his union based on citizenship status), irrespective of whether the H1 performs better , is more qualified and all the rest of it!. So much for basic fairness and natural justice. Thank goodness the US is a far better country than {deleted} would want to make it!.

It seems your {deleted} is unable to grasp the SIMPLE FACT that H1-B is a temporary hired help because the companies were not able to find skilled labor in a particular sector. When that assumption is no longer true with unemployment rate around 8%, there is no obligation to keep the TEMPORARY hired help around and that is what the senator is talking about. Got it ? Open your {deleted} eyes and quit babbling, this is a republican senator, nothing to do with any union as you are hallucinating.

EXPATs HIGHCOST became an issue only when the economy went sour. Same is the case here with respect to H1. yes, average americans have far more decency and patience than the participants in this forum, otherwise H1/L1 would have been stopped by now. But that doesn't mean that the patience is not going to wear out, do you know why those attempts to increase the H1-B visa cap over the last few years didn't go through despite havinga sympathetic republican president and lobbying from companies like Microsoft, unlike early 2000s when the visa cap was almost 200,000?

{deleted}

Moderator note: Mind your language.

[pradeepe]

End that patronising tone re. H1/L1 and all that. The US is what it is because of what came out of it.

average americans have far more decency and patience than the participants in this forum, otherwise H1/L1 would have been stopped by now. But that doesn't mean that the patience is not going to wear out,

Sure and life's a one way street. Such attitudes must be those lingering memes from the brits.

[markos]

Deleted

[vina]

It seems your pea-sized brain is unable to grasp the SIMPLE FACT that H1-B is a temporary hired help because the companies were not able to find skilled labor in a particular sector. When that assumption is no longer true with unemployment rate around 8%, there is no obligation to keep the TEMPORARY hired help around and that is what the senator is talking about. Got it ? Open your jaudiced eyes and quit babbling, this is a republican senator, nothing to do with any union as you are hallucinating.

God this guy is totally unreal! . Get your facts right. H1B is a DUAL INTENT visa , which is a clear path to work based immigration. That is why it has so much checks and balances and all the rest of it. Ask any immigration lawyer worth his salt. They are NOT temporary hired help, but PERMANENT employees of the companies they work for and have the same RIGHTS and PROTECTIONS as every other PERMANENT employee. Got that ?. You cannot hire H1Bs on a Temp basis.

And that is exactly the REASON why H1Bs pay all that Soc Security taxes and every other taxes the same as citizens, even if they dont get the benefits , because it is "expected" (if not explicitly written down) that they will eventually become citizens and get the benefits. For example on a pure "temp" visa like a B1, you dont pay ANY taxes there . America was founded on "No Taxation without Representation" (heard of the "intolerable acts" ?,I guess not). So go back to your union pals and senator tell them that like that Robert Torricelli and the Dan Burton guy got it back in time, eventually he too will, when the targets he/she is picking on right now becuase they are "weak" wont remain so forever and eventually he is antagonizing a large number of potential citizens who will kick his/her backside badly in return in due course of time.

[Suraj]

Folks, what did you have for breakfast/dinner that caused so many of you to take leave of your senses and start attacking each other like school kids ?

If you have a problem with a post by someone, use the icon at the bottom right of the post to report it.

Please note: I will hand out more warnings to those who persist with this silliness. Three warnings add up to an automatic ban from the forums.

[Singha]

there is no obligation to keep the TEMPORARY hired help around and that is what the senator is talking about. Got it ?

economic situations can lead to rise or fall of the H1b quota but there is
no provision to my knowledge under the law to selectively target and lay
off TN/H1/send-back-L1 visa holders vs native citizens. they are subject
to the same non-discriminatory nature of employment laws as enjoyed
by anyone.

so people may demand such a law and write to their congress reps about
it but please show me the current law which allows that.

no company will like to lose trained existing workers and have to hire
a fresh set of people to replace them, so they will resist this kind of move strongly.

[vina]

economic situations can lead to rise or fall of the H1b quota but there is no provision to my knowledge under the law to selectively target and lay off TN/H1/send-back-L1 visa holders vs native citizens. they are subject
to the same non-discriminatory nature of employment laws as enjoyed by anyone.

Exactly. That is the correct legal and ethical position. This demand of "layoff foreigners first" kind of thing happened in 2001/2002 also if you remember after the dot com meltdown. But nothing came out of it, because it is fundamentally wrong. H1 is a dual intent visa and that is why you can apply for permanent residency (which you cant in a J1 and F1).

so people may demand such a law and write to their congress reps about it but please show me the current law which allows that.

Yup. You have to bring in a new visa category and can apply it only going forward. The existing H1s and others came under a differnent visa , under different conditions. You cannot make laws on the fly/whims and apply it retrospectively. If you want to have work place discrimination or student discrimination (like the union wanted to do with me , the univ said, all students are same to us once you are in), you need to rewrite some of the existing laws that prohibit discrimination based on immigration status, place of origin etc. And in fact that is what these "fire foreigners first" types want. They want to have modern day "slaves" , whose lives they can have control over based on their whims and fancies and it would be just rank exploitation. In that case, you cant legally tax the earnings of any H1s either!. These guys want to do both. Tax their H1/L1 earnings while giving the no benefits of their taxes ie basically exploit, a fundamental violation of natural justice. Not the American way surely. The Senator types can jump all they want, but when the larger audience sees what it entails out of America's value system, it will die a natural death.

no company will like to lose trained existing workers and have to hire a fresh set of people to replace them, so they will resist this kind of move strongly.

Oops!. But these types think that their "quality" is better and that companies like MSFT hire people for "cost" and not skills.. Yeah, most H1 types in a place like Microsoft, Google and much of Silicon Valley would probably have a masters from a US univ or a top rated global univ, have strong experience and most of these tech companies hire primarily for their Engg, R&D and at best Tech Consulting & IT wings based on skills. Few if any would hire H1s for any functions like marketing, sales, finance etc and if at all they hire any foreigners, it would be ones with permanent residents.

Ah,but no , facts be damned. No point in feeding random trolls. I will stop here.

[Singha]

BW:

Boeing to Chop 10,000 Jobs
The aerospace giant more than doubles its planned layoffs in light of a $56 million net quarterly loss and signs of trouble ahead

[Singha]

BW

The Bank Bailout Is Broken
But the Obama Administration and Congress are starting to grapple with the enormity of the problems in the financial system

By Jane Sasseen

January 26, 2009

Last year, as the U.S. financial system began to unravel, former Treasury Secretary Hank Paulson used to talk about the bazooka in his pocket. It was a metaphor designed to calm investors anxious about the government's willingness to spend massive taxpayer dollars to save the financial system if really needed. But Paulson's weapon jammed. For despite an array of lending programs by the Federal Reserve and the $700 billion Troubled Asset Relief Program (TARP) passed by Congress during his tenure, Wall Street firms and banks still collapsed left and right last fall.

Now the Obama Administration is effectively saying: Forget the bazooka, let's bring out the heavy artillery. The President's economic advisers believe it is time to hit the reset button on existing bailout programs, and think big. There's no choice given the deepening recession that's driving up jobless rates and home and credit-card defaults. All that in turn is contributing to multibillion-dollar quarterly losses at the likes of Citigroup (C) and Bank of America (BAC).

"Bad Bank" Could Cost $2 Trillion

One big piece of that effort, of course, is the controversial $819 billion package of spending and tax cuts that were approved by the Democratic-controlled House of Representatives on Jan. 28. At the same time, the Fed is ramping up programs to buy securities backed by car, credit-card, and student loans as well as mortgage-backed paper to help thaw the credit markets.

Fixing the banks, Obama advisers argue, will require a more innovative approach than the capital injections into lenders that the Bush team settled on. Fed lending and government cash transfers help, but Bush's advisers backed away from tackling the array of toxic assets that have caused a massive erosion of capital on bank balance sheets and have made extending loans to all but the most creditworthy borrowers unthinkable. "Money is moving throughout the system, but there is increasing recognition that these institutions don't have enough capital to withstand the losses from all the crazy loans they have," says Frederick Cannon, a banking analyst with Keefe, Bruyette & Woods (KBW).

New Treasury Secretary Timothy F. Geithner is exploring the creation of a government-funded "bad bank" to buy up mortgage-backed securities and other troubled assets from banks in hopes of boosting their capital levels so they can begin lending again. Daniel Clifton, Washington policy analyst for Strategas Research Partners, says Treasury is considering starting the bank with $100 billion from TARP, then adding leverage from the Fed and the Federal Deposit Insurance Corp. so $1 trillion in funding is available to buy bad assets. Ultimately, he adds, Administration officials believe they could need up to $2 trillion.


Fixing the banks will almost certainly require far more than $700 billion in TARP funds. Goldman Sachs (GS) analyst Andrew Tilton figures U.S. financial institutions will suffer more than $1 trillion in loan losses—about half of which have been recognized so far. The problem isn't only with residential mortgages. Add in commercial real estate and other poorly performing loan categories, and the banks may hold some $5 trillion in "troubled assets" on their books, he says. New York University's bearish economics professor, Nouriel Roubini, estimates that additional private and public capital of $1 trillion to $1.4 trillion will be needed to recapitalize the banks.

Guarantees vs. Asset Purchases

Another idea being considered by Treasury and White House officials would offer banks federal guarantees that limit their losses on bad assets backed by dud loans, as with Citi and BofA. While this might cost taxpayers as much as buying the banks' assets, guarantees would allow the Administration to avoid the difficult and politically risky step of potentially overpaying for assets now trading at fire-sale prices. In extreme cases, authorities also could put capital directly into the banks in exchange for common equity—pulling off a thinly veiled nationalization of the worst banks.

Analysts say a combination of remedies is likely. "They'll need to create a mix of options," says Karen Shaw Petrou of Washington research firm Federal Financial Analytics. Prying more money out of Congress for expanded bank bailouts will be tough. Yet it's hard to see the economy recovering without healthy banks. Getting there won't come cheap.

Sasseen is Washington bureau chief for BusinessWeek.

[vsudhir]

p_saggu, please see reply in Global Economy thread. vsudhir, isn't most of the recent stuff posted here more apt for that thread?

Not quite. This thread is a specialized subset of the global econ one. The latter is for news and stories on the general economy, this one is specifically about collecting forumite perspectives, gyan, analysis, informed speculation, intelligent guesses etc *on the current meltdown*.

The original intent was to focus on the impact on G7 and the threats and opportunities this may present India with. Has since grown beyond that mandate, IMO.

Like the 26/11 thread later on merging into the tsp one, I see this one too merging into the global econ one somewhere down the line.

Peace!

[vina]

The cleanest way to clean up the banking mess and get credit flowing again ,with the moral hazards of overpaying for impaired assets (if you buy at current values, the banks will fold up anyways) and all else is to Nationalize (oops, did I say the N word?) by wiping out the existing share holders (who anyway gave the leeway to the bank managements to play around with their capital) , capitalize the bank with public money fully, hold the impaired assets in a bad bank and then over time when the economy recovers , sell the shares in the now healthy banks back to the public and gradually dispose off the now fully healthy assets. That is the only way the tax payers money can be safeguarded and got back with decent returns, the system can be nursed back and the moral hazards of using tax payers money to bail out shareholders and not punish them for the risks they took.

For some time, the US will have to swallow the fact that the "N" thing happened to the "commanding heights" / apple of their eye of their economy that they are United Soviets of America. . There is no other way out.

Come on, it is not that bad. The Swedish did it, why India did it recently with UTI and Indian Bank, see other countries do it too. Britainistan will do it anyways.

[vsudhir]

Yup, like I heard someone mentioning the other day:

trillion is the new billion (onlee)

Hollywood would cover itself in glory if it made a movie on the Wallstreet frauds & scamsters and their DC allies, appropriately titled

scumdawg billionaire

BTW, must take issue with one sentence vina writes above:

You cannot make laws on the fly/whims and apply it retrospectively.

Apparently, you can. The cram down provisions that passed a key House panel day before yesterday essentially empower judges to write down the principal outstanding in existing mortgages. Someone mention changing the rules midway through the game.... well this is it. IMVVHOs onlee.

I'm more concerned about what this means going fwd. Its a slippery slope now on if the 'fairness of principle' of such retrospective laws gets accepted, IMO.

[AshokS]

A Bankruptcy judge has had this power and others for years. The law may make it applicable (or more likely in this case a prescriptive course of action given the current economic climate). A bankruptcy court can covert debt to equity, happens often - there was a case where engineers at Loral Space systems decided to do essentially an MBO via way of Chapter 11, bought subordinate debt which was later converted to equity giving them a controlling interest - the judge can ensure creditors get their share based upon the waterfall or protect debtors as required to reorg, or assign a new board, etc.... Bottom line is the capital structure can change.

[AshokS]

... is to Nationalize (oops, did I say the N word?) by wiping out the existing share holders (who anyway gave the leeway to the bank managements to play around with their capital) , capitalize the bank with public money fully

What do you think happened to AIG and Citi effectively via TARP and whatever its replacement called now. The US govt became an activist investor in these companies - and will do well in a few years after they sell their positions.

[Singha]

Sony which was already struggling well before the meltdown reports a 95% drop in 3Q profit.
sales of games and electronics down by 30%. it has already announced factory closings and a
large redunction in staff.

[AshokS]

once the US is deprived of the right to print extra money, its geopolitical leverage will take a serious nosedive.

Be careful of what you wish for. India and Indians - amongst other nationalities - have benefited from the economic framework that has been in place for decades. You would agree that the economic face of India has changed in the past 30 years largely due to mutual economic interests with the US. These economic interests have been a source of immense wealth creation for PIOs/NRIs and Indians citizens alike.

Who will fill the void? Which BRIC economy has the means? Their total factors of productivity as a country is weak compared to the US, different ones for different reasons.

Russia? - A friend of mine that is an executive in a large Russian hospitality and casino company would not agree after his office was raided in Moscow for political reasons
China? - Sure, if you like the Gobi education camps for dissent and whitewashed statistics
Brazil? - Why are they in the BRIC list again?
India? - Lack of governance, poor academic institutions at large, a population unable to effect change in the government due to their own complacency, fifth columnist, journalists emaciated for integrity, leadership is truly "chickens with their heads cut off" as the Indian ambassador mentioned.... So this country will drive the new global economy? India has been fortunate with resources, with a strong and deep culture, bright minds, a sense of morality and a young population today. So India has the means, the resources, but poor execution. So India will somehow lead? The fact is that India today is closer to a banana republic than a leader. Lets acknowledge this first before we think about the next steps.

We need to be somewhat thankful that the US was the sole superpower. If India can't capitalize on her strengths, its the fault of India. Yes there were attempts to box in India with unfair regimes and such, but that is what you do in competitive situations. Game theory anyone?

[AshokS]

Full text of Putin's Speech at Davos...

The entire economic growth system, where one regional centre prints money without respite and consumes material wealth, while another regional centre manufactures inexpensive goods and saves money printed by other governments, has suffered a major setback. China US trade, which was effectively "seller financing"

Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. Corporate Governance and Regulation

Second. Apart from cleaning up our balance sheets, it is high time we got rid of virtual money, exaggerated reports and dubious ratings. In effect, our proposal implies that the audit, accounting and ratings system reform must be based on a reversion to the fundamental asset value concept. FAS 157 - Mark to Market

Third. Excessive dependence on a single reserve currency is dangerous for the global economy. Consequently, it would be sensible to encourage the objective process of creating several strong reserve currencies in the future. It is high time we launched a detailed discussion of methods to facilitate a smooth and irreversible switchover to the new model. If the US dollar collapses,... This Putin thinking strategically to undermine the US - unfortunately for him, oil is cheap today

I brought up all of these points on page 4 of this thread and an earlier incarnation (during the MBA flamewar) a few weeks ago. The issue was, and I will repeat it here:

"There were multiple reasons for what happened to happen, largely due to disintermediation of risks and rewards due to securitization. This was a failure of corporate governance and regulation. Yes, there was fraud as well, but that is small compared to the trillions in derivatives which collapsed like a house of cards."

[Satya_anveshi]

>>>We need to be somewhat thankful that the US was the sole superpower.

What deal you got when going is good is one thing and but can you get a good deal when the going is tough? Well..even when the going is good, what were the payoffs for you and for them?

We need a system that is more balanced and fair to our requirements both in good and bad times. The current crisis is an opportunity to further our interests/clout in the global economy (relative to what we have today) and so our interests merge with Putin, Germany etc. Not making use of this opportunity is criminal.

[vsudhir]

Good points.

Again, like I mentioned before, crisis needn't be all bad. After all it is only crisis that manages to dislodge the entrenched status quo backed by vested interests and shielded by establishment inertia. Previously, crises took the form of destructive world wars - and lets admit WWII was good for India and bad for UKstan.

Would be nice to have some transition towards a better world without the bloodletting but I quite realize thats more than merely unrealistic. There will be blood, whether literal or figurative. So we in Des ought to keep the powder dry and never let down our guard.

I await an internal crisis in India that would push governance and social structures towards a more responsive (rather, 'less broken') condition. The external crisis gives India an opportunity to learn from others' mistakes without having to make them ourselves. Beyond that, we're too small a player in terms of global trade to matter much right now. Not necessarily a bad thing in 2009, IMO.

If one reads the first few pages of this thread, it becomes eminently clear that what ss_roy bemoaned was this mentality of aiming low, of snatching defeat from the jaws of victory, of pre-emptively gagreeing we don't deserve better, of not trying at all and giving up before entering the race etc. Seems to me India is afflicted seriously with the ‘Hanuman syndrome’.

Legend has it that Shri Hanuman,polite to a fault, never quite grasped his own power, and had to be told (by a trusted Jambavant) that leaping over the sea to Lanka was nothing really for him. Twas only then that the inevitable happened. For instance, in the case of TSP, India similarly, has forgotten - inadvertantly or otherwise - the memory of greatness, and of wrath, the sweet taste of victory and of just and karmic retribution. Still waiting for kaliyug ka Jambavant on that front.

OK, enough OT ranting. JM2Ps onlee etc.

[Singha]

http://community.nytimes.com/article/co ... bonus.html

people react to the news that wall street still gave out $18b in bonuses in 2008

[vsudhir]

Was watching BBC on PBS today. Lead story is the lockdown in France. Trade unions are back in business bigtime, maybe one last time. The alternative to the economic rescue policies is economic collapse followed by a possible golden trade-union raj era, perhaps.

Paris unrest will spread around the world, unions warn

The second story was abt some plant in UK that has attracted protests from nearby plants and towns for (legally) importing EU workers for a contract. The locals say jobs should go to locals first (never mind the difference in hourly rate). Order out of chaos. The battle-lines are beginning to appear.

Meanwhile, Obama is using the 'bully pulpit' of the preseidency to bully sone *shame* into wall street execs...haha - good luck with that I guess.

Obama slams wall street bonuses

termed it 'shameful' and 'the height of irresponsibility'

[Satya_anveshi]

http://community.nytimes.com/article/co ... bonus.html
people react to the news that wall street still gave out $18b in bonuses in 2008

Someone needs to communicate to these nuts that what they feel about Wallstreet, World feels the same about US. That the nation nay the entire western civilization is built on the loot and plunder.What are you going to do about it?

[vsudhir]

Goldman: Bank Rescue May Reach $4 Trillion (and "Bad Bank" Issues)

Creeping acquisitions anybody? Creepy feelings, certainly. What was touted first at some $1.4 trillion in losses then jumped to twice that much within weeks and then last week, Roubinin came up with a $3.6 trillion figure that some commentators raised doubts about ('It's too high') and now this. Any guesses where we may be headed next week? Just how big and bad is this hole?

And to think the GOTUS was cribbing and dragging its feet on worthy projects such as the universal healthcare system which would've have cost this much but would have something tangible to show for it. And that congress once killed the superconductor supercollider project for what - a few billions? Mere chump change!

The cost of restoring confidence in U.S. financial firms may reach $4 trillion if President Barack Obama moves ahead with a "bad bank" that buys up souring assets.

The figure far exceeds even the most pessimistic estimates of how great the loan losses might be because there is so much uncertainty about default rates, which means the government may need to take on a bigger chunk of bank debt to ease concerns.

Goldman Sachs economists said ideally the public sector would step in to remove the hardest-to-value assets, which would alleviate nagging worries about future losses and hopefully help get lending going again.

"Unfortunately, with an unprecedented meltdown in mortgage credit and a deep recession in the broader economy, there is a great deal of uncertainty about the value of almost every asset,"...

Goldman Sachs estimated that it would take on the order of $4 trillion to buy troubled mortgage and consumer debt. That number could shrink if the program were limited to only certain loans or banks, but it could also grow if other asset classes such as commercial real estate loans were included.

New York Sen. Charles Schumer has said that a number of experts thought that up to $4 trillion may be needed to buy the bad assets, an estimate that a Senate aide said was based on informal conversations with people in the industry.

Nobody's forecasting the movement of the US dollar over the next few qtrs, I notice. Anybody have any info on this?
The US will want to devalue, IMO, but deflation has sucked in dollars from all over and devalued other currencies by more.

[Arya Sumantra]

Who will fill the void? Which BRIC economy has the means? Their total factors of productivity as a country is weak compared to the US, different ones for different reasons.

India? - Lack of governance, poor academic institutions at large, a population unable to effect change in the government due to their own complacency, fifth columnist, journalists emaciated for integrity, leadership is truly "chickens with their heads cut off" as the Indian ambassador mentioned.... So this country will drive the new global economy? India has been fortunate with resources, with a strong and deep culture, bright minds, a sense of morality and a young population today. So India has the means, the resources, but poor execution. So India will somehow lead? The fact is that India today is closer to a banana republic than a leader. Lets acknowledge this first before we think about the next steps.

I just want to know what traits of superpower did US have in immediately after WWII except large European economies owing a lot of money to it ? All the Institutions in the social, academic and military spheres and even Infrastructure developed largely after it became super power. The Infrastructure such as highways were largely built by President Eisenhower in the 50s. They had their own companies before WWII but they grew into global giants post WWII. The universities grew into prominence post WWII.

US made sure it broke down the existing sources of power of Europeans. It acquired the crucial technologies(eg Jet Engine from Britain) as stepping stones to improve upon with further R&D and push its own industrial might. It recognizes its own universities above the European ones for work in US. It encouraged expert scientists and professors to immigrate to US.

US took the mantle of superpowerdom before it nurtured the traits of a superpower to the full blossom.

India seriously needs to push defence-centric fundamental research in our universities. Have programs similar to DARPA. Let the defence personnel dream of future war-machines and the fundamental research required to enable those should be listed. Then research projects on those should be invited from all universities. Eventually, as an offshoot from those defence research projects in universities, the commercial spin-off products would be created by entrepreneurial PhDs/post-docs/profs. Internet was first envisioned in 1970s by ARPA.

I know there is a lot to be done. Optimists are not always successful but Pessimists are always failures.

[abhischekcc]

One of the strengths of the Post WW2 US economy was its relative isolation from the European catastrophe.

Same is the case with India.

That does not mean that we can replicate the same strategy. Indian economy is not large enough to absorb all the goods that others may want to sell.

However, that does mean we have negotiating power when they have not. Remember, East India Company was a nobody in the Indian scene, until internal strife made it a paramount power. It was able to see opportunity when it arose because they kept an open mind.

Singing hosannas to America will not make a miracle happen. They are screwed and we have negotiating power. Now, if only we get a tough guy like Modi as the next PM, we will be able to do an 1857 in reverse to the west.

This is what ss_roy was talking about.

[munna]

Just adding to the fairly interesting discussion that I have witnessed on these pages, for all the naysayers about Indian productivty and low social capital base one has to realize that social capital is generated by the government spending in the social sector by developed world governments. In UK-stan (for example) apart from the loot and plunder of colonies the only other significant source of revenue for the HM treasury was the finance sector with this sector turning net borrower vis a vis government how do we expect the government to deliver bailouts after bailouts without depleting the existing capital stock in the country. Once the real capital gets depleted or is lowered significantly there will be adverse affects on social capital stock. Already the university funding, seats and school allocations are being reduced or in the process of being reduced. Thus if people think that some countries have higher per capita productivity just because they have shiny universities and talk Angreji they are mistaken. The higher productivity was a net result of overall higher physical capital stock in the nation gathered by loot and plunder and indirectly by the investment of the physical stock in the social stock. When the base or datum level physical stock goes down chasing the paper capital, for how long will their advantage last?

[ramana]

Hats off to vina for the terminiology of the sub-prime market primary setting off the secondary in the TN meltdown of the global economy. Today Wh spokeman said the same thing in effect that the sub-prime crisis and housing market downturn have started affecting the whole econmy and that led to the -3.8% growth in US economy.

My view:
If one adds the inventorie replenishment which were counted as assets its more like -5.5% in tune with what the experts were suggesting. Overall the economy grew 1.5% in 2008. So in effect fourth quarter contraction was major bubble bursting say like rising pizza dough from which the air has been punched out. Its after effects will be felt this quarter too at a minimum while DC fiddles with the stimulus package which might have to be bigger closer to $1.5T in my opinion to be of any effect.

[vsudhir]

And to corroborate what Ramana says, here are some links onlee

U.S. Q4 GDP down 3.8%, inventories limit downturn

The U.S. economy contracted at a 3.8% annualized rate in the fourth quarter but the decline would have been worse except that the government counts an unwanted buildup of goods on store shelves as growth.

A clearer picture of the scope of the weakness in the fourth quarter, which excludes the inventory buildup, contracted at a 5.1% pace, the weakest in 28 years.

Economy ging from bad to worse, reports show

Many economists think the economic output declined in the fourth quarter at an annual rate of 5% or more -- which would make it the worst quarter for the U.S. economy since 1982.

"It will be bad," said Nigel Gault, chief U.S. economist at IHS Global Insight, a forecasting firm in Lexington, Mass. He estimated that the economy shrank at a 5.3% annual rate in the three months that ended Dec. 31.
...
"It's going to confirm what we already know, and that is that we're in a severe recession," said Ben Herzon, senior economist with forecasting firm Macroeconomic Advisers in St. Louis, who expects the report to show a decline of 5.5%.

Cargo - traditionally used an an instrumental variable in economic models to measure the intensity of economic activity - has literally fallen off a cliff. Both trucking and air cargo report declines in double digit percentages. Aircargo decline 22%+ whereas even after 9/11, when air freight was grounded a substantial amount, the Q4 results of 2001 were 'only' 13%+ below Q3 numbers.

Air cargo plummets 22.6%

More bad news as Boeing announced a 10,000 job cut and even Starbucks is cutting down bigtime on stores and employees after reporting record losses. [A starbucks coffee costs like ~$5 almost whereas a Dunkin Donuts coffee is ~$1.5. And this is the worst recession in a while. Go figure.]

[Singha]

to be fair the US had a long period of peace-progress-n-development after the civil war upto around 1925 (75 yrs) during which they became the worlds largest industrial power in magnitude while lagging behind the europeans in high technology. the mass emigration of european intellectual elites just before and after WW2, plus "projects" like recruiting 100s of nazi era scientists into areas like nasa gave the necessary "boost" to high technology too and any even domestic capabilities underwent a massive upg during WW2.

they had managed to provide universal educashun and some healthcare by the mid 1920s. resources in land, oil, minerals, water were boundless compared to pop.

meantime....
http://www.smh.com.au/news/world/widows ... 08449.html

we need a strong full squadron passive ESM mission on this blog
http://dabagirls.wordpress.com/

The widows of Wall Street slip into a great depression

Ravi Somaiya in New York
January 30, 2009 - 3:17PM
Page 1 of 2 | Single page

THE economic crisis came home to Megan Petrus, 27, when her boyfriend of eight months, a derivatives trader for a big bank, proved to be more concerned about helping a laid-off colleague than comforting her after her father had a heart attack.

For Christine Cameron the recession became real when the financial analyst she had been dating for about a year would get drunk and disappear while they were out together, then accuse her the next day of being the one who had absconded.

Dawn Spinner Davis, 26, a beauty writer, said the downward-trending graphs began to make sense when the man she married on November 1, a 28-year-old private wealth manager, stopped playing golf, once his passion. "One of his best friends told me that my job is now to keep him calm and keep him from dying at the age of 35," Ms Davis said. "It's not what I signed up for."

They shared their sad stories at an informal evening gathering of Dating a Banker Anonymous, a support group founded to help women cope with the inevitable relationship fallout on Wall Street from the global financial crisis.

In addition to meeting once or twice weekly for brunch or drinks at a bar or restaurant, the group has a blog, billed as "free from the scrutiny of feminists", that invites women to join "if your monthly Bergdorf's allowance has been halved and bottle service has all but disappeared from your life".

Laney Crowell, 27, parted ways with a corporate real estate investor last month after a tumultuous relationship. When she introduces other Wall Street widows to the group, Ms Crowell says, "they call their friends and say, 'You're not going to believe what I just read. It's going to make you feel so much better.' "

Once it was seen as a blessing in certain circles to have a wealthy, powerful partner who would leave you alone with the credit card while he was busy brokering deals. Now many Wall Street wives, girlfriends and, increasingly, exes, are living the curse of cutbacks in nanny hours and reservations at Masa or Megu. And that credit card? Cancelled.

Raoul Felder, a Manhattan divorce lawyer, said cases involving financiers always stacked up as the economy started to slip, because layoffs and shrinking bonuses placed stress on relationships - and, he said, because "there aren't funds or time for mistresses any more".

Harriet Pappenheim, a psychotherapist at Park Avenue Relationship Consultants who wrote For Richer Or Poorer, a 2006 book on money in marriage, said the repercussions could be acute for Wall Street wunderkinds who defined their identities through their job titles and the size of their bonuses.

"It's a big blow to their egos and to their self-esteem," she said of the endless stream of economic bad news, "and they may take it out on their partners and children."

Ms Petrus, a lawyer, and Ms Crowell, who works for a fashion website, started the support group when they realised that they were facing similar problems in their relationships with bankers last northern autumn.

"We put two and two together and figured out that it was the economy, not us," Ms Petrus recalled at a meeting in the lobby bar of the Bowery Hotel.

Many of the women said that as the economic crisis struck they began tracking the markets during the day to predict the moods that the men they loved might be in later. On big news days, like when the first proposed government bail-out failed in Congress, or when Lehman went belly-up, they knew that plans to see their partners would be put off.

"I was like, 'OK I signed up for that; it's fine,' " said Ms Cameron. "But all of a sudden," she said, her boyfriend "couldn't focus. If he stayed over he'd be up at some random hour checking his BlackBerry, Bloomberg and CNBC."

One frequent topic among the group is the link between the boardroom and the bedroom. "There's actually the type of person who has a bad day on the trading floor and they want to have sex more," Ms Spinner Davis offered as she sipped a vodka gimlet.

Ms Petrus chimed in. "If you're lucky you'll get that guy," she said, not revealing whether she considered herself lucky.

Brandon Davis, Ms Spinner Davis's husband of almost three months, acknowledged in a telephone interview that his new job was "certainly more stressful and there's certainly more pressure" because of the economy, but disagreed that such stresses had affected his home life. He did not want to talk about golf.

The New York Times

[Raghav K]

On The Edge of The Abyss.

http://market-ticker.org/archives/756-O ... Abyss.html

That gives us a target on the S&P 500 of 210.

No, that's not a misprint.

I said two hundred and ten, and I meant two hundred and ten.

This puts the DOW at TWO THOUSAND.

[Singha]

I wouldnt worry too much about it...there will mass riots, suicides, mobs and flaming buildings in NYC and major amirkhan cities well before that. the elites will run away to buenos aires using the excellent csar abilities of the US military, the rest will fight like dogs in the street over a roti.

I like what this woman says in the blog link posted. eat , drink, make love...let nature and the good lord take care of things:

Next time you are stressing over some finance guy remember that he is just a math club nerd with cash and that there are some things money just can’t buy a woman, and a mind blowing orgasm is one of them. So relax, as evidenced by the existence of this blog, none of your girlfriends are marrying rich banker types any time soon. You are not going to be the last of your friends to marry well. This recession just bought everyone an extra two years of the single life. SAVOR IT. Go, have a steamy affair with some Latin lover who spends his free time thinking up new bedroom positions instead of trading positions. Relish that for the here and now you don’t have to be seen in public with a guy who wears black shiny shoes with jeans. Carpe diem my loves.

[Arya Sumantra]

I wouldnt worry too much about it...there will mass riots, suicides, mobs and flaming buildings in NYC and major amirkhan cities well before that. the elites will run away to buenos aires using the excellent csar abilities of the US military, the rest will fight like dogs in the street over a roti.

The elite goras of Unkil will pack all their cash and escape to tax havens in EU like Switzerland. They will leave behind poorer goras with no cash and minorities in Unkil to fend for themselves. While the rich goras will be busy encashing and packing their bags, the minorities will be busy distracting themselves with creating records like first hispanic president of Unkil, first Indian president of Unkil (eg Jindal types), first chinese president of Unkil etc. Every community will be given a "fair" chance to attempt to salvage what would remain of Unkil.

[Singha]

WSJ - a river begins as a gentle glacial stream....
http://online.wsj.com/article/SB123336068486635277.html

California to Delay $4 Billion in Payments
Income-Tax Refunds, Student Grants and Welfare Checks Fall Victim to Budget Impasse

By BOBBY WHITE and STU WOO

California's chief accountant on Monday will begin delaying nearly $4 billion of scheduled state payments, postponing income-tax refunds, grants to college students and welfare checks in an effort to prevent the state from running out of cash.

The delays will hurt an already wilting state economy, economists said, calling them the opposite of stimulus checks because people won't get money they expect to receive. Controller John Chiang has said the delays will last 30 days.

In an interview Friday, Mr. Chiang said further deferments are possible. "I am very concerned about the potentially devastating impact to individuals, to families, to businesses," he said. But "my principal responsibility at this time is to make sure that California does not go into default."

United Teachers Los Angeles and union supporters protest Thursday against state and local budget cuts.

For many weeks, Mr. Chiang has warned the state would run out of cash in late February if legislators didn't agree on a balanced budget. Now, as lawmakers continue to haggle over how to erase a budget deficit projected to reach $42 billion by mid-2010, the state's chief accountant has said he must delay payments to meet constitutionally mandated debt obligations.
..........

While many counties have enough cash to get through February, Trinity County in Northern California has only two to three weeks of reserves, said Dero Forslund, Trinity's administrative officer. Once the money runs out, the county will issue IOUs to its 320 workers, he said, and then see if service reductions will be necessary as well. Trinity was expecting $2 million from the state in February, he said.

For years, California has relied on borrowing, by selling municipal bonds, to help get through difficult budgetary situations. But with a bond market that has nearly dried up -- and with a poor credit rating -- the state is hard-pressed to borrow. Moody's Investors Service last week joined two other major credit-rating agencies -- Fitch Ratings and Standard & Poor's -- in warning it may further downgrade California's rating. California is already tied with Louisiana for the lowest credit rating among states.

[abhischekcc]

And to corroborate what Ramana says, here are some links onlee

U.S. Q4 GDP down 3.8%, inventories limit downturn

The U.S. economy contracted at a 3.8% annualized rate in the fourth quarter but the decline would have been worse except that the government counts an unwanted buildup of goods on store shelves as growth.

A clearer picture of the scope of the weakness in the fourth quarter, which excludes the inventory buildup, contracted at a 5.1% pace, the weakest in 28 years.

The 1.3 percent buildup inventory means that pain is being postponed or spread over a longer period of time.

Right now, some production is not being sold, which is nice for employment. But inventories WILL need to be sold some time later, then it will be negative for employment.

[Singha]

so what kind of physical goods does US produce - machinery, tools, automobiles, planes, electronics, computers, crops/diary/meat produce,
beer, whisky, rum, vodka, some textiles, paper, industrial chemicals, metals, weapons, building materials, wood, magazines & books ........

most of above are not low wage chipanda type jobs, these jobs put millions of people in lower-middle and middle-middle class. its going to hurt.

[Singha]

CNN:

DAVOS, Switzerland (CNN) -- German Chancellor Angela Merkel warned Friday that U.S. efforts to prop up its failing auto industry with bailout money amount to a form of protectionism that threatened to distort the global economy.