Perspectives on the global economic meltdown

[Rahul Mehta]

New York Fed chairman resigns over conflict of interest with Goldman Sachs
http://www.washingtonpost.com/wp-dyn/co ... 04276.html

This highlights the continued corruption at the very top levels of the US financial system.

The corruption/nexuses between elitemen and regulations, senators, president etc is not new. It has been for over 100 years. The ONLY reason for this nexuses has been -- the citizens in US dont have procedures to expel/replace regulators like Fed Chairman, FCC Chairman etc. and there is no JurySys in regulator's tribunals and no JurySys over regulators and their staff.

The information about nexus did not become public as elitemen owned all Economists and also owned all mediamen. The Economists who wrote textbooks never mentioned this Fed-elitemen nexus and important role it plays in enriching elitemen at the cost of commons. And anyone who gave information on Fed-elitemen nexus was silenced by usual "do you have any proof" argument. Thanks to internet, Economists and mediamen dont have control over information spread and so details about unholy nexus of Fed-elitemen is now coming public.

Now US can go to hell - we should not worry about US. For us, US itself is one of the biggest problem. So we should not waste even one second on how problems of Americans can be solved. We should confine our gray matter to solving India's problem only. But lessons to be learned from nexuses between Fed and elitemen are

1. Indian RBI officials and Indian elitemen too have same unholy nexuses. And in India too, the information on this nexus is suppressed as elitemen pay tons of money to intellectuals and mediamen. The intellectuals and mediamen use "do you have proof" argument to suppress the information on RBI-elitemen nexus.

2. Unless we enact procedures by which citizens can replace/expel RBI Chairman, the nexuses between RBI-elitemen will keep growing and keep hurting us. What is worse is that RBI officials also have nexuses with videshi elitemen, a problem not seen in US as American elitemen are much stronger than non-American elitemen. So RBI will keep ruining India big time unless we enact replacement procedures.

==================================

Got in mail, too many assumptions there but nontheless , interesting,

========

It is August. In a small town on the South Coast of France, holiday season is in full swing, but it is raining so there is not too much business happening. Everyone is heavily in debt.

Luckily, a rich Russian tourist arrives in the foyer of the small local hotel. He asks for a room and puts a Euro100 note on the reception counter, takes a key and goes to inspect the room located up the stairs on the third floor.

The hotel owner takes the banknote in hurry and rushes to his meat supplier to whom he owes E100.
The butcher takes the money and races to his supplier to pay his debt.
The wholesaler rushes to the farmer to pay E100 for pigs he purchased some time ago.
The farmer triumphantly gives the E100 note to a local prostitute who gave him her services on credit.

The prostitute goes quickly to the hotel, as she owed the hotel for her hourly room use to entertain clients.
At that moment, the rich Russian is coming down to reception and informs the hotel owner that the proposed room is unsatisfactory and takes his E100 back and departs.

There was no profit or income. But everyone no longer has any debt and the small town people look optimistically towards their future.

=======================

COULD THIS BE THE SOLUTION TO THE Global Financial Crisis? Or, is there a catch here?

The bank-owners have paid assorted intellectuals to create an illusion that money manufacturing will solve problems i.e. let banks manufacture E100, act like Russian customer, give E100 to someone and then take it back. There are two reasons why above example never ever worked in real world

1. Interest : Say Russian had charge E10 as interest. Now he gave E100 and next day, he demands E110. Pray, how the hell would villagers come up with extra E10? IOW, bank-owners manufacture money equal to the principal amount when they give loans and money to pay interest is not manufactured. This INCREASES the debt.

2. Siphoning out of funds : In above example, Russian paid money to hotel owner , who pays to B, who pays to C, who pays to D who pays to A who pays to the Russian. Say one person say B in chain elopes with money. The hotel owner will be royally screwed when Russian comes back to collect E100. He will have to declare bankruptcy and Russian may be able to buy whole hotel for peanuts as no one else has cash.

Thats exactly how bank-owning individuals have been becoming wealthier and wealthier in terms of real assets. They will manufacture money and suddenly stop the manufacturing. This creates credit crisis and default, and enables them to buy real assets for cheap.

The fact that bank-owners have unlimited power to manufacture money means eventually bank-owners will own everything and everyone else will be slave of bank-owners. There is NO escape, unless you change the rules of the game itself.

[Nandu]

You know those cases where the professor awards a C, and the pyt engages some tears and some cleavage to get it raised to a B?

Well, that is apparently what happened with the much vaunted "stress tests".

http://online.wsj.com/article/SB124182311010302297.html

[vsudhir]

The Class of '09 Curse

College graduates who land jobs this year will likely suffer lower wages for a decade or more compared to those lucky enough to graduate in better times, studies show

Any BRFites struck by this curse? At least in Des and in graduate study in massaland ('cept for an MBA), the study loans aren't quite a burden for life, IMO.

[svinayak]

24Million unemployed in US right now - Radio news

[Nandu]

24Million unemployed in US right now - Radio news

13.7million according to official statistics, but I guess one could have different measures.

[svinayak]

24Million unemployed in US right now - Radio news

13.7million according to official statistics, but I guess one could have different measures.

Official number is for people who are active in the search for job
Rest is for who have stopped looking for job

[vsudhir]

Yes. BLS uses U3 as the offical unemp measure and thats roundabouts ~ 14 mil now. The larger and likely more accurate U6 (whcih includes those that have dropped out of the emp mkt after 6 months of fruitless search) is a better gauge for economic drivers such as consumption, demand, savings and price expectations, IMO.

[vsudhir]

California Continues To Implode

The State’s revenues continued to deteriorate in April. Total General Fund revenues were down $1.89 billion (-16%) from the latest estimates found in the 2009-10 Budget Act.

Personal income taxes were $1.06 billion below the estimate (-12.6%), corporate taxes were below the estimate by $831 million (-35.6%) and sales taxes lagged the estimate by $108 million (-19.9%).

Some of April’s sales tax receipts were pushed into early May, but declining taxable transactions still drove sales tax receipts well below the Budget Act projection. While California’s sales tax rate went up April 1, revenues from the new rate will not be seen until May.

Compared to April 2008, General Fund revenue in April 2009 was down $6.3 billion (-39%). The total for the three largest taxes was below 2008 levels by $6.3 billion (-40.3%). Sales taxes were $452 million lower (-50.9%) than last April, and personal income taxes were down $5.7 billion (-43.6%). Corporate taxes were $142 million below (-8.6%) April of 2008

Sales tax collections year to date are short $327 million (-1.8%) from the 2009-10 Budget Act. Income taxes were $653 million lower (-1.7%) than expected, and corporate taxes were $788 million lower than expected (-9.5%).

The State’s other revenue streams were $299 million below (-6.7%) the estimates. Because the 2009-10 Budget Act contained actual revenue through February 2009, these disparities only occurred in the months of March and April.

Not pretty IMHO. Raising taxes can only work so far. After that spending cuts - whether voluntary or not - will have to kick in. Calif has been living beyond its means for a while now. Way beyond, actually.

[vsudhir]

Vanishing Credit Lines for Consumers and Small Businesses

JPMorgan Chase and others are shoring up balance sheets by reducing or eliminating these financial lifelines to entrepreneurs.

For small business owners, a line of credit can be a lifesaver, giving them a buffer against cash-flow problems and enabling them to handle regular expenses such as payroll. But beginning in March, according to documents obtained by BusinessWeek, JPMorgan Chase suspended credit lines for a large number of business owners. According to someone familiar with the matter, the move affected thousands of businesses. They had been clients of Washington Mutual before Chase bought the ailing bank in September 2008. The documents show that Chase tasked a special group inside the bank with responding to inquiries from borrowers.

If business owners can't convince Chase of their creditworthiness, they have three options: 1) pay off the balance in full; 2) agree to a conversion of the line of credit into a term loan; or 3) go into default.

Thomas Kelly, a spokesman for Chase, says the bank continually reviews the lines of credit in its portfolio. "We contact customers if we determine there has been an adverse change in their financial condition or credit history. We may eliminate the unused portion of their credit line and set up a standard repayment plan." Kelly says the bank encourages customers to contact Chase if they want the decision reevaluated or if they want to provide information such as their federal tax return. And he says the bank has assigned staff to work with customers who want such decisions reexamined.

SMEs are bigtime employment drivers and innovators in countless small towns across America. Their folding up en masse will hurt bigtime, I fear.

[Nandu]

Yes, U-6 is 24 million, but in addition to unemployed, and those who have given up on looking, it also includes people who are only working part time, because they can't find work full time.

[vsudhir]

Blog at the Heritage foundation on the econ storm brewing.

“Terrible” Treasury Auction Exposes Hole in Obama Econ Plan

There are two critical consequences to the economy stabilizing. The first is that the massive liquidity injected into credit markets by the Federal Reserve and central banks around the world transforms from economic medicine to inflationary heroin. Central banks are going to face a difficult task of extracting the excess liquidity before inflation soars and without causing another recession. Doubt about the fight against soaring inflation means higher inflation premiums in interest rates.
The second dangerous consequence is that President Obama is on course to double the national debt in just four years. After years of complaining about annual deficits of $300 billion or $400 billion and their effects on interest rates, liberal commentators are suddenly silent now that the deficit is heading toward $2 trillion under a liberal administration. But now the vaunted “crowding out” effect from government borrowing is almost a certainty, as are the resulting higher interest rates.
Healing financial markets and a stabilizing economy generally translate into higher interest rates for long-term, high-quality bonds like 30-year Treasuries. The effect of the projected massive government borrowing, however, is to drive interest rates as much as a full percentage point higher yet. This will mean higher interest rates for consumer loans, mortgage loans, business loans, etc. Instead of a 6.5 percent mortgage rate, home buyers will face a 7.5 percent rate. The debt-based Obama economic stimulus plan is about to become a major drag on the recovery, just as expected.

[Bade]

Corus, JLR acquisitions done at inopportune time: Tata

LONDON: Indian business tycoon Ratan Tata has said his two acquisitions -- Anglo Dutch steelmaker Corus and British Marquee Jaguar Land Rover --
were done at an "inopportune time."

In an interview published in the Sunday Times, Tata admitted with hindsight that he might have gone too far too fast, but that nobody saw the economic recession coming.

"If one had known there was going to be a meltdown, then yes (Tata went too far), but nobody knew. Both the acquisitions were made, I would say, at an inopportune time in the sense that they were near the top of the market in terms of price," Tata told the Sunday Times.

What a sad state of affairs at a premier MNC Indian brand to admit this. I presume this was all done with great strategy planned and executed with bestest and world topper MBAs from IIMs. Whereas, the poor SDRE engineers at TATA toiled hard to only bring out a puny NANO which became a hit long before it hit the markets and oversold even in this downturn. It does not take more than an idiot to figure out who creates more value SDRE engineers or TFTA MBAs.

[Raja Bose]

^^^ derkonig-ullah where art thou? Thy hallowed institution's reputation is at stake

[svinayak]

http://www.charlierose.com/view/interview/10280

http://www.usatoday.com/news/washington ... icit_N.htm

*****

As of Date - US Government Total Public Debt Outstanding

Estimated figures:

09/30/2019 $ 21.3 trillion dollars (estimate) ($12 + 9.3)

09/30/2009 $ 12 trillion dollars (estimated figure)

Actual figures:

05/07/2009 $11,256,266,640,050.20

09/30/2008 $10,024,724,896,912.49

09/28/2007 $9,007,653,372,262.48

09/30/2006 $8,506,973,899,215.23

09/30/2005 $7,932,709,661,723.50

09/30/2004 $7,379,052,696,330.32

09/30/2003 $6,783,231,062,743.62

09/30/2002 $6,228,235,965,597.16

09/30/2001 $5,807,463,412,200.06

01/19/2001 $5,727,776,738,304.64

http://www.treasurydirect.gov/NP/BPDLog ... ication=np

*****

YEAR – U.S. Gross Domestic Product (GDP)

2001 - $ 10.1 trillion dollars

2002 - $ 10.4 trillion dollars

2003 - $ 11.0 trillion dollars

2004 - $ 11.7 trillion dollars

2005 - $ 12.4 trillion dollars

2006 - $ 13.2 trillion dollars

2007 - $ 13.8 trillion dollars

2008 - $ 14.3 trillion dollars

Source: http://www.bea.gov/

Actual figures by Bureau of Economic Analysis

*****

YEAR – U.S. Gross Domestic Product (GDP)

2009 - $ 14.1 trillion dollars

2010 - $ 14.6 trillion dollars

2011 - $ 15.2 trillion dollars

2012 - $ 16.0 trillion dollars

2013 - $ 16.7 trillion dollars

2014 - $ 17.4 trillion dollars

2015 - $ 18.1 trillion dollars

2016 - $ 18.9 trillion dollars

2017 - $ 19.6 trillion dollars

2018 - $ 20.4 trillion dollars

2019 - $ 21.2 trillion dollars

Source:

Estimated Figures 2009 – 2019 by Congressional Budget Office as of March 2009

http://www.cbo.gov/doc.cfm?index=10014

*****

Note: I want to bring to your attention that the global economy collapsed in 2008 and we had a massive global economic meltdown – but by looking at the official US government statistics for U.S. GDP you would not know that we had such an economic and financial crisis affecting the United States economy.

The above USA Today article said: “"Deficits in the, let's say, 5% of GDP range would lead to rising debt-to-GDP ratios that would ultimately not be sustainable," Orszag told reporters.”

And that statement was based on the above Fairy Tale figures for US GDP that are published by the US government.

If you want to learn about truth about the real US GDP then check the following site:

The US economy and the real GDP

http://www.elitetrader.com/vb/showthrea ... did=126048

In a Nutshell:

At the end of the day a more realistic figure for the actual GDP for the US economy for 2009 is estimated to be around $ 10 trillion dollars and not the Fairy Tale figure published by the US government of $ 14.1 trillion dollars.

.

[svinayak]

What a sad state of affairs at a premier MNC Indian brand to admit this. I presume this was all done with great strategy planned and executed with bestest and world topper MBAs from IIMs. Whereas, the poor SDRE engineers at TATA toiled hard to only bring out a puny NANO which became a hit long before it hit the markets and oversold even in this downturn. It does not take more than an idiot to figure out who creates more value SDRE engineers or TFTA MBAs.

THey need an global economist and a team who keep track of the shadow banking system and European and American banking system.

BRF could be a good think tank for early economic trends and global trends. Indian business can hire the services of BRF and its members

[svinayak]

[Nandu]

I have in the past tried to dig into the shadow stats guys. The fact is, they don't fully explain their methods, in a way that would allow one to reproduce their calculations, but they do produce nice looking graphs.

[svinayak]

Other groups have substantiated those same numbers

[Ameet]

Banks brace for credit card write-offs

http://www.nytimes.com/2009/05/11/busin ... T7hubu82Og

Highlights:

The bank stress test results, released Thursday, suggested that the nation’s 19 biggest banks could expect nearly $82.4 billion in credit card losses by the end of 2010 under what federal regulators called a “worst-case” economic situation.

But if unemployment breaches 10 percent, as many economists predict, the rate of uncollectible balances at some banks could far exceed that level. At American Express and Capitol One Financial, around 20 percent of the credit card balances are expected to go bad over this year and next, according to stress test results. At Bank of America, Citigroup and JPMorgan Chase, about 23 percent of card loans are expected to sour.

Even the government’s grim projections may vastly understate the size of the banks’ credit card troubles. According to estimates by Oliver Wyman, a management consulting firm, card losses at the nation’s biggest banks could reach $141.5 billion by 2010 if the regulators’ loss rate was applied to their entire credit card business. It could top $186 billion for the entire credit card industry.

In the official stress test results, regulators published losses only on credit cards held on bank balance sheets. The $82.4 billion figure did not reflect another element in their analysis: tens of billions of dollars in losses tied to credit card loans that the banks packaged into bonds and held off their balance sheets. A portion of those losses, however, will be absorbed by outside investors.

[Ameet]

Experts say GM bankruptcy almost inevitable

http://news.yahoo.com/s/ap/20090511/ap_ ... bankruptcy

[vsudhir]

Experts say GM bankruptcy almost inevitable

http://news.yahoo.com/s/ap/20090511/ap_ ... bankruptcy

You don't need experts to say that. It was obvious to anybody willing to shut out dhimmedia distractions and look at the math. The numbers simply don't add up and haven't in the past 10 yrs at least.

The overgenerous "concessions" UAW extracted from GM have returned to bite the now retired UAW honchos in their 70s and 80s in the butt. Perfect case of parasite sucking the lifeblood out of the host. Defined benefit pensions have been insolvent from the word go for a while now. Period.

GM's bankruptcy will have ripple effects - a cascade of supplier bankruptcies upstream and dealer wipeouts downstream. Less said about consumers the better. But the long winded nature of the drip-drip deathwatch means markets and other stakeholders have already factored this downfall in and hence won't be as bad as some fear.

[Satya_anveshi]

Corus, JLR acquisitions done at inopportune time: Tata

What a sad state of affairs at a premier MNC Indian brand to admit this. I presume this was all done with great strategy planned and executed with bestest and world topper MBAs from IIMs. Whereas, the poor SDRE engineers at TATA toiled hard to only bring out a puny NANO which became a hit long before it hit the markets and oversold even in this downturn. It does not take more than an idiot to figure out who creates more value SDRE engineers or TFTA MBAs.

No fault of yambeeyeas saar when it is the vision of CEO that went bonkers on this. Some of the other yambeeyeas have been voicing their opinion against this deal even before the global meltdown.

If he has any shame, he ought to step down for that mistake and for the loss of shareholder value he caused.

[Bade]

I am sure there are yum-be-aaayes advising him before he takes such risky ventures. Well if they failed in convincing their boss of his mistake they should go too, unless they resigned before things went for a six.

[vsudhir]

Economists' stand-up humor....

http://www.youtube.com/watch?v=9utlDdLhaTU

Bloody funny onlee.....

Ensoi.

[vsudhir]

[vina]

What a sad state of affairs at a premier MNC Indian brand to admit this. I presume this was all done with great strategy planned and executed with bestest and world topper MBAs from IIMs. Whereas, the poor SDRE engineers at TATA toiled hard to only bring out a puny NANO which became a hit long before it hit the markets and oversold even in this downturn. It does not take more than an idiot to figure out who creates more value SDRE engineers or TFTA MBAs.

Ouch.. Bade Saar's Churi is sharp as ever and he plunges it in at the most opportune time as always. .

But truth be said, Yum Bee Yeas also created tremendous value for Tata Motors. They snapped up the Daweoo Truck division for Tata , which by any standards was a brilliant buy (gave entry into China, the duopoly market in Korea and a global standard truck design and engg capability) and also going back a long way, part of the reason why Tata could roll out the original Indica at such low prices was that Nissan had put up a brand new plant in Australia and then shuttered it in a a very short while when the market turned south there. The YumBeeYeas, went and bought that plant at fire sale prices and had them shipped over to Yindia.

So not only SDRE Yingineers onree Saar. TFTA YumBeeYeas created lots of value as well (though I admit that the JLR and Corus were ill timed and done in the wrong part of the cycle.. Well, if only vina had been working for Tata, I would have put my put down on those deals . Moi is a skin flint dhoti clad value buyer in the Yindoo Bania mould onree no ?)

[manish]

.... part of the reason why Tata could roll out the original Indica at such low prices was that Nissan had put up a brand new plant in Australia and then shuttered it in a a very short while when the market turned south there. The YumBeeYeas, went and bought that plant at fire sale prices and had them shipped over to Yindia.

Yup. And IIRC, the whole plant was bought for roughly US$20mil only. This I recall from a 1997 or 1998 Auto India article on the Indica project. Can't be too sure about the figure though, its been over a decade since I last read it!

[Bade]

ArcelorMittal workers attack Luxembourg HQ

Looks like a scene out of myriad bandhs and violence in WBengal.

LUXEMBOURG
: Steel workers attacked ArcelorMittal's Luxembourg headquarters on Tuesday, setting off smoke bombs and trying to break through the front door to protest temporary layoffs during the economic slump.

While the company held its annual shareholders' meeting, some among the 1,000 workers from Belgium and France hurled cobblestones and steel fencing at the building, which riot police lined up to protect.

One protestor broke into the building and between 20 and 30 others fought police at the entrance. Journalists were told to leave the ground floor and go out a back entrance as smoke filled the halls.

[Bade]

Ouch.. Bade Saar's Churi is sharp as ever and he plunges it in at the most opportune time as always. .

Gustafi Maap, saar. Will try not to do that again... Nice to know that some value is also added by engineer converts to mba bandwagon.

[derkonig]

What a sad state of affairs at a premier MNC Indian brand to admit this. I presume this was all done with great strategy planned and executed with bestest and world topper MBAs from IIMs. Whereas, the poor SDRE engineers at TATA toiled hard to only bring out a puny NANO which became a hit long before it hit the markets and oversold even in this downturn. It does not take more than an idiot to figure out who creates more value SDRE engineers or TFTA MBAs.

^^^ derkonig-ullah where art thou? Thy hallowed institution's reputation is at stake

jeehhhhhhhhhhhhhhaaaaaaaaaaaaaaaaaaad......
ignorant kuffars, how dare joo sully the reputashun of the IIMs....

This surely looks like the work of those MBAs from TFTA amirkhan schools or for that matter, even ISB . If only, TATA had the good faith to apporach the chankian SDRE yumbeeyaes phrom the humble IIMs, Motors-e-TATA would have been Motors-e-TFTA instead of the SDRE, cowering in the dark about future cashflows.

On a serious note, its a humbling moment for the whole strategic planning community, no risk models could have factored in shocks of this magnitude, some times you end up on the wrong side of those probability distributions.

[Nandu]

Credit card issuer to small businesses shuts down.
http://www.bloomberg.com/apps/news?pid= ... FhoI2A4ZsM

[Bade]

Laid off overseas, IIM grads seek institute help

Approximately 300 students from the premier Indian Institutes of Management and even Indian School of Business, Hyderabad, who were placed overseas last year, are bearing the brunt of a slowing economy.

Having lost their jobs abroad, many students are requesting their institutes to help them with placements again.

[vsudhir]

GM Will Notify 1,000 Dealers on May 15 of Franchise Expiration

General Motors Corp., working to shrink operations to match consumer demand, will notify 1,000 to 1,200 auto dealers on May 15 that they fail to meet franchise agreements.

GM will deliver letters to dealers whose stores fail to meet criteria such as sufficient working capital, sales or customer-satisfaction levels, explaining that GM will not renew their franchise agreements when they expire this year or in 2010, GM spokeswoman Susan Garontakos said.

The largest U.S. automaker said last month it plans to shrink its dealer network to about 3,600 from the 6,200 outlets it operated at the end of last year as part of the restructuring plan it presented to the Obama administration.

Meanwhile, akin to rats deserting sinking ships...

GM Falls to 76-Year Low After Executives Sell Stock.

General Motors Corp., facing a June 1 deadline to restructure or file for bankruptcy, fell to its lowest in New York trading since 1933 after the automaker reported yesterday that six executives sold their shares.

GM declined 29 cents, or 20 percent, to $1.15 at 4:15 p.m. in New York Stock Exchange composite trading. The shares touched $1.09 earlier today, the lowest since April 22, 1933, adjusted for splits and distributions, said Bryan Taylor, chief economist at Global Financial Data in Los Angeles.

In regulatory filings after the close of regular NYSE trading yesterday, the company disclosed that the executives sold their shares.

And all this results in....

GM May Fail Even After Bankruptcy Reorganization

Wahan, Chrysler is cutting 800 dealerships.Link

The US auto industry has seen the future and is heading there now.

[vsudhir]

Washington Post Defines "Wealthy" as Someone Who Earns $60,000 a Year

G7 are scrambling to ramp up tax revenues at a critical time, gunning for offshore tax havens, taxing outsourcing and the like. Expect them to also raise marginal tax rates across the board (almost).

[Singha]

but in europe isnt the tax already pretty high in most of the "rich" countries?

UK for instance I believe provides a heavily subsidized GOI type higher education
to its citizens?

[AnimeshP]

Not sure if this has been posted here before ...

The Story of Stuff ...

[Chinmayanand]

Federal Reserve Inspector General doesn't know where the money went ... reports of Fed off-balance sheet transactions

[vsudhir]

resident alarmist (more like realist, sometimes) Ambrose evans pritchard writes in the telegraph

Enjoy the rally while it lasts - but expect to take a sucker punch

Our delicious spring rally is nearing the limits. The 40pc rise on global bourses since March assumes that central banks have conjured away the debt overhang by slashing rates to zero and printing money. Nothing of the sort has occurred. Two thirds of the world economy will be in deflation by July.

Worth a full read, with some salt.

[vsudhir]

but in europe isnt the tax already pretty high in most of the "rich" countries?

UK for instance I believe provides a heavily subsidized GOI type higher education
to its citizens?

Good point. Desperation is the grandmother of invention.

I'm saying that not only will the tax burden (includes marginal tax rates, sales tax, property tax etc) inch higher wherever it can, the erstwhile services promised - in edu, healthcare, social safety net, public services like firefighting & ambulances, public expenditures like law enforcement, jury duty and courts - all will take haircuts mighty soon.

There's simply no way to get the numbers to add up and sustain on their current tax revenue-public expenditure gap.

And suits them well too. The same bunch that heartlessly baked Asia's nuts in the late 90s crisis by recommending belt-tightening via its IMF proxy can soon relish what fun it really is. In any case they have no choice.

Added later:
This is what I was talking about:

California formally asks Geithner for TARP assistance

California Treasurer Bill Lockyer asked U.S. Treasury Secretary Timothy Geithner on Wednesday to authorize assistance for his state from the federal Troubled Asset Relief Program, warning that depressed tax revenues may cut into basic services and halt the building of infrastructure.

In a letter, Lockyer asked Geithner for TARP assistance for California and "other financially strapped states and local governments which face a severe cash flow crunch."

"If we cannot obtain our usual short-term cash-flow borrowings, there could be devastating impacts on the ability of the State or other governments to provide essential services to their citizens," Lockyer wrote.

In addition, Lockyer warned in the letter that California's cash flow problems may lead to trouble accessing the long-term bond market, which could "eventually even halt our infrastructure construction programs."

Lockyer estimated that California's cash flow shortfall in fiscal 2009-2010 will be more than $13 billion.

And

LA Mayor calls on City Council to declare fiscal emergency

With Los Angeles facing a $529-million budget deficit, Mayor Antonio Villaraigosa on Tuesday urged the City Council to declare a fiscal emergency that would grant him the authority to lay off and furlough thousands of city workers.

The request signals a more hard-line tack by the mayor to win salary and benefit concessions from the city's public employee unions, which had soured on Villaraigosa's call for a salary freeze, furloughs and increased benefit costs to save $230 million and avert the need for layoffs.

Villaraigosa said the worsening economy and an expected $300-million drop in city tax revenue gave him "very few options." L.A.'s budget gap is expected to grow to $1 billion in the 2010-2011 fiscal year because of investment losses in the city's pension systems, which the city is required to keep solvent.

"The gravity of the fiscal emergency that we face is enormous," Villaraigosa said in his letter to the council. "Unless we act with urgency, the city will face a cash flow crisis, raising the prospect of running out of cash between November and February."

And no, no chance things will improve from here. It is a long way downhill from here. Just like UKstan in the EU, calif is the canary in the coalmine for the USA.

[vsudhir]

US must woo world tourists: lawmakers

The United States needs to wage a charm offensive to woo overseas tourists seduced by rivals like France and Italy, US senators and industry experts agreed Wednesday

"Other countries are out there saying to the international tourists: "Come to Rome! See the beauty of Italy! Visit Paris! See the wonders of France! Come to London! Other countries are actively engaged because they know it is a huge jobs generator," Democratic Senator Byron Dorgan told a hearing.

Dorgan is the lead author of legislation to create a coordinated national campaign aimed at attracting foreign guests to the United States, a major economic engine sputtering in the face of a global recession.

Industry figures show that international visitors spend roughly 4,000 dollars per person during their stay in the United States, generating 1.38 trillion dollars in sales in 2008 and supporting some 8.6 million jobs.

Well, yes. Tourism is a big draw indeed. But why is the prospective tourist any different from the typical consumer? He/she will prefer to wait for the dollar exschange rate to be a bit more realistic and favorable first, no? Once inflation sets in thx to the trillions pumped into the system (assuming the fed is unable to suck them out of the system fast enough - a reasonable assumption, IMHO), the exchg rate fluctuations would be interesting to watch.