Perspectives on the global economic meltdown

Ardeshir
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Re: Perspectives on the global economic meltdown

Postby Ardeshir » 22 Mar 2009 22:34

vina wrote:Prasant, as a trader, you of all the people should know better than to fall for this 'south/south ' ,"alternate" rubbish of the leftist/socialists/commie /JNU/DSE ding dongs. Chan Akya kid of dude will fall in one or more of those categories.

Buying bonds from fellow asians indeed and that too in which currency, dollars! :rotfl: . Why dollars may I ask ?. Why not buy the Korean Won bonds itself ? . Why not chinese RMB bonds itself ? That article by that dude in Atimes was so half assed . Yawn. also forget about basic risks a bond holder takes like Credit Risk, Interest Rate risk, Event Risk, Options Risk and all those things and even for a market as deep as the US treasury, these risks are calculated, accounted for to the minute. Point is , every country will want the safest party to give their hard earned money to and that , is the US Treasury today. Will you trust your dollars for the paper written by the Korean/Chinese/Indonesian central bank and what is the compensation you will want for that extra risk ?.

Fundamentally, if those guys are distressed, it makes their credit capacity that much less. For eg, when india was on the verge of defaulting in 1990/91, the Koreans refused to honor the letters of credits of most Indian importers, even from banks with near sovereign rating like SBI!. So much for that South-South rubbish. Trusting USD or any bonds written by an Argentina/Brazil/Ecuador/Venezuela or similar guy in S.E Asia/Korea/Phillipines etc doesnt make too much sense.

Vina saar, I am not advocating the trade, I am merely wondering if they are engaging in it the way many 'experts' have been recommending.
I am fully aware that dollars whether issued by Unkil or Chicom are still dollars. Economics 101 - Credit risks go through the roof in such a scenario.

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Re: Perspectives on the global economic meltdown

Postby bhavani » 23 Mar 2009 00:34

From Jobless to Topless

A Strip club has 50 positions and are expecting hundreds of applicants.

http://www.msnbc.msn.com/id/29824663/

There has also been a general divide on who got more effected because of the Housing crisis. IN majority of states blacks got more affected because of the housing crisis. Now class action law suites are being brought on saying that the banks led blacks towards bad loans. It will really important to see how obama stands on this issue. Till now he has enough political capital to get out of AIG and everything else and blame Bush or geithner.

http://www.msnbc.msn.com/id/29678907/

I think US might as well file a class action lawsuit stating that China Corrupted the oncorruptable americans by getting them hooked on Cheap consumer goods.

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Re: Perspectives on the global economic meltdown

Postby Nandu » 23 Mar 2009 01:06

Gady Epstein in Forbes wrote:
China's U.S. Debt Quandary

It's the old debtor's aphorism, writ on a sovereign scale: If you owe China $1 billion, it's your problem. If you owe China $1 trillion, it's China's problem.


People keep repeating this, but it is classic short term thinking. Eventually, US creditworthiness suffers, and once it cannot raise revenue from the rest of the world, it is curtains for Unkil's preeminence in the world.

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Re: Perspectives on the global economic meltdown

Postby Arya Sumantra » 23 Mar 2009 01:58

Nandu wrote:Eventually, US creditworthiness suffers, and once it cannot raise revenue from the rest of the world, it is curtains for Unkil's preeminence in the world.

Yes but whatever it cannot get as a debt from other countries it will assume onto itself and print more. Yes that will cause inflation but where- mostly in the countries exporting to massa. And as products from one country start getting expensive they will switch to another like how they mostly bought from japan in 70s,80s and switched to cheaper china in 90s once their goods become expensive massa will import from some one else. That way the inflation of prices in asian exporting countries does not hurt massa consumers.

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Re: Perspectives on the global economic meltdown

Postby ppatil » 23 Mar 2009 06:13

How the global economic crisis is a blessing in disguise for BRIC especially India and China?
The second article is from the same author who first coined the term BRIC in 2001.

This year GDP is expected to contract by 3 percent in the U.S. and Europe, and by close to 6 percent in Japan, while continuing to expand in China and India by 7 and 5 percent, respectively.

That growth gap is destined to reshape the economic future of the world. Goldman Sachs chief economist Jim O'Neill now predicts that the major emerging markets—Brazil, Russia, India and China, a.k.a. the BRICs—could overtake the combined GDP of the G7 nations by 2027, nearly a decade sooner than the forecast in a landmark study a few years back. The ascent of the formerly poor giants is accelerating, and their confidence is evident not only in the utterances of Wen Jiabao. Manmohan Singh of India has blamed the "massive failure" on authorities in "developed societies," but his peers all name America by name.

Power Up. What's called a 'global' recession is in fact shrinking economies mainly in the West, not the East


While I predicted a few years back that the BRIC economies would together be larger in dollar terms than the G7 by 2035, I now believe that this shift could happen much faster—by 2027.


What many casual observers of our BRIC projections never realized is that we used extremely conservative assumptions about real GDP growth. Our forecasts assumed growth in China of just 5.8 percent from 2001 to 2050, including a slowdown to 5.2 percent from 2011 to 2050. Until recently, China had been growing at more than double this rate. Even now, the consensus for 2009 is 7 percent (we are below consensus at 6 percent), rising to more than 8 percent next year. For the period from 2011 to 2050, we project 2.8 percent growth in Russia, the BRIC that is suffering most from the global turmoil, and 6.2 percent growth in India, the BRIC with the most rapidly growing population.


The New Shopping Superpower

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Re: Perspectives on the global economic meltdown

Postby Singha » 23 Mar 2009 08:30

NYT

Op-Ed Columnist
Are We Home Alone?

By THOMAS L. FRIEDMAN
Published: March 21, 2009

I ran into an Indian businessman friend last week and he said something to me that really struck a chord: “This is the first time I’ve ever visited the United States when I feel like you’re acting like an immature democracy.”

You know what he meant: We’re in a once-a-century financial crisis, and yet we’ve actually descended into politics worse than usual. There don’t seem to be any adults at the top — nobody acting larger than the moment, nobody being impelled by anything deeper than the last news cycle. Instead, Congress is slapping together punitive tax laws overnight like some Banana Republic, our president is getting in trouble cracking jokes on Jay Leno comparing his bowling skills to a Special Olympian, and the opposition party is behaving as if its only priority is to deflate President Obama’s popularity.

I saw Eric Cantor, a Republican House leader, on CNBC the other day, and the entire interview consisted of him trying to exploit the A.I.G. situation for partisan gain without one constructive thought. I just kept staring at him and thinking: “Do you not have kids? Do you not have a pension that you’re worried about? Do you live in some gated community where all the banks will be O.K., even if our biggest banks go under? Do you think your party automatically wins if the country loses? What are you thinking?”

If you want to guarantee that America becomes a mediocre nation, then just keep vilifying every public figure struggling to find a way out of this crisis who stumbles once — like Treasury Secretary Timothy Geithner or A.I.G.’s $1-a-year fill-in C.E.O., Ed Liddy — and you’ll ensure that no capable person enlists in government. You will ensure that every bank that has taken public money will try to get rid of it as fast it can, so as not to come under scrutiny, even though that would weaken their balance sheets and make them less able to lend money. And you will ensure that we’ll never get out of this banking crisis, because the solution depends on getting private money funds to team up with the government to buy up toxic assets — and fund managers are growing terrified of any collaboration with government.

President Obama missed a huge teaching opportunity with A.I.G. Those bonuses were an outrage. The public’s anger was justified. But rather than fanning those flames and letting Congress run riot, the president should have said: “I’ll handle this.”

He should have gone on national TV and had the fireside chat with the country that is long overdue. That’s a talk where he lays out exactly how deep the crisis we are in is, exactly how much sacrifice we’re all going to have to make to get out of it, and then calls on those A.I.G. brokers — and everyone else who, in our rush to heal our banking system, may have gotten bonuses they did not deserve — and tells them that their president is asking them to return their bonuses “for the sake of the country.”

Had Mr. Obama given A.I.G.’s American brokers a reputation to live up to, a great national mission to join, I’d bet anything we’d have gotten most of our money back voluntarily. Inspiring conduct has so much more of an impact than coercing it. And it would have elevated the president to where he belongs — above the angry gaggle in Congress.

“There is nothing more powerful than inspirational leadership that unleashes principled behavior for a great cause,” said Dov Seidman, the C.E.O. of LRN, which helps companies build ethical cultures, and the author of the book “How.” What makes a company or a government “sustainable,” he added, is not when it adds more coercive rules and regulations to control behaviors. “It is when its employees or citizens are propelled by values and principles to do the right things, no matter how difficult the situation,” said Seidman. “Laws tell you what you can do. Values inspire in you what you should do. It’s a leader’s job to inspire in us those values.”

Right now we have an absence of inspirational leadership. From business we hear about institutions too big to fail — no matter how reckless. From bankers we hear about contracts too sacred to break — no matter how inappropriate. And from our immature elected officials we hear about how it was all “the other guy’s fault.” I’ve never talked to more people in one week who told me, “You know, I listen to the news, and I get really depressed.”

Well, help may finally be on the way: one reason we’ve been sidetracked talking about bonuses is because the big issue — the real issue — the president’s comprehensive plan to remove the toxic assets from our ailing banks, which is the key to our economic recovery, has taken a long time to hammer out. So all kinds of lesser issues and clowns have ballooned in importance and only confused people in the vacuum. Hopefully, that plan will be out by Monday, and hopefully the president will pull the country together behind it, and hopefully the lawmakers who have to approve it will remember that this is not a time for politics as usual — and that our country, alas, is not too big to fail. Hopefully ...

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Re: Perspectives on the global economic meltdown

Postby Sanjay M » 23 Mar 2009 11:13

Personally, I don't like these AIG brokers/employees threatening to leave and take the company down with them if they don't get their full bonuses. The fact that a company like AIG has grown large enough that it, or even its employees by proxy, can threaten to damage the economy if they're not rewarded or bailed out, means that it's time to call their bluff.

These guys are acting like US auto-workers or PATCO workers. Only instead of striking, they're threatening to leave, with the implied threat of bringing society to a halt. If California dockworkers can be legislated back to work, then so can employees of firms recieving bailouts. Or else, the govt should threaten to outsource their jobs, and really leave them in the lurch.

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Re: Perspectives on the global economic meltdown

Postby James B » 23 Mar 2009 21:03

Sweden Says No to Saving Saab

Saab Automobile may be just another crisis-ridden car company in an industry full of them. But just as the fortunes of Flint, Mich., are permanently entangled with General Motors, so it is impossible to find anyone in this city in southwest Sweden who is not somehow connected to Saab.

Which makes it all the more wrenching that the Swedish government has responded to Saab’s desperate financial situation by saying, essentially, tough luck. Or, as the enterprise minister, Maud Olofsson, put it recently, “The Swedish state is not prepared to own car factories.”

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Re: Perspectives on the global economic meltdown

Postby ramana » 23 Mar 2009 21:23

ppatil, thanks for the update of GS report on BRICs. So it moves from 2035 to 2027 a shift of 8 years early. This is what I was asking Suraj for. Am still waiting for his take.

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Re: Perspectives on the global economic meltdown

Postby ramana » 23 Mar 2009 23:26

X-posting for completeness...

amit wrote:This WSJ article has a lot of comments which can lead to a better understanding of present mess.
First the comments:

In recent weeks, a growing chorus of prominent economists -- including U.S. Federal Reserve Chairman Ben Bernanke and Bank of England Gov. Mervyn King -- have pointed out that it took more than greedy bankers, profligate American consumers and lax regulation to generate a crisis of global proportions. While all those factors played important roles, they say, the conditions were created in part by China and other Asian nations, which over a decade of export-led growth socked away trillions of dollars in the form of foreign-currency reserves. Their efforts to invest those savings flooded Western financial markets with cash, making it cheaper to borrow at a time when people in places like the U.S. and the U.K. were building up debts at an alarming rate.
The huge machine of subprime-mortgage lending that triggered the crisis, the logic goes, was just one of the many ways bankers took advantage of these so-called "global imbalances" by putting savers and borrowers together
.


As the G-20 meeting approaches, Mr. Portes and others are offering a menu of remedies, from boosting the authority of the International Monetary Fund to making the fund a central repository for foreign-currency reserves -- an idea reminiscent of the global central bank economist John Maynard Keynes had in mind in 1944, when world leaders created the IMF at a meeting in Bretton Woods, N.H. All the options have their drawbacks, but if some way can't be found to get Asians to save less and Americans to save more, economists warn that the world will inevitably find itself in trouble again.


Even as global economies have taken a turn for the worse, one measure of the imbalances -- China's vast current-account surplus -- has hardly subsided. The IMF estimates that the surplus, which reflects both China's net exports and how much capital it sends abroad, grew to about $399 billion last year from $372 billion in 2007. If the surplus persists, it could fan the flames of protectionist sentiment, as Western politicians worry that their countries' huge stimulus packages are boosting exporters on the other side of the planet.


After the crisis, the countries changed tack, focusing on spurring exports by keeping their exchange rates low against the dollar -- a strategy that boosted foreign-currency reserves to record levels. As they invested those reserves in places like the U.S. and U.K., they put an unprecedented strain on financial markets. One indicator of that strain -- net cross-border capital flows -- stood in 2008 at about $1.9 trillion, or 3% of global gross domestic product, according to IMF estimates. That's more than twice the level of 1997, before the Asian financial crisis hit.


Others, though, believe persuasion alone won't be enough. Mr. Portes sees the main impetus for China's and other nations' accumulation of foreign reserves in their desire to insure themselves against a crisis like that of the late 1990s. One solution, put forth in a list of proposals to the G-20, is to provide a substitute for that insurance -- for example, by pooling foreign-exchange reserves at the IMF and giving the fund greater power to step in and provide crisis-stricken countries with unconditional emergency financing. To make the insurance more credible, China and other emerging markets would be given more say at the IMF -- a direction in which the G-20 is moving.

One problem with the insurance plan, though, is that if it worked, it could encourage countries to act irresponsibly, keeping their exchange rates at unsustainable levels on the assumption that the IMF would come to the rescue in an emergency. "It's putting barrels of propane around your house to protect it," says Catherine Mann, professor of international economics and finance at Brandeis International Business School in Massachusetts.


The reasons for the crisis is well known: cheap exports, principally from China, and the resultant inflow of dollars into US Treasury bonds gave rise to the illusion that all was well in Massaland and Teflon-quoted Alan Greenspan could wisely explain the US housing bubble and an incredible 4 per cent (odd) growth in a mature economy to “growing productivity of the US workers” and in effect hide the gigantic bubble.

Now, it looks like folks have cottoned on that this can't go on. Notice the point about forcing the Asians (read Chinese) to spend more and the Americans to save more. Not easy to do but suppose that this can be done then what?

First of all, the whole model on which the Chinese economy is built on - factory of the world, stuff - will turn on its head. A lot of articles have been posted on the PRC econ thread which shows that despite all the much-touted domestic consumption plan China can't (yet) substitute domestic consumption for export consumption to keep its growth rate intact. So how does China maintain its minimum 7 per cent growth in order to keep people off the streets? This is something China will have to tackle just as the US needs to tackle the toxic assets problem.

On the US side in the short to medium term it needs China (that is its US$1 trillion in Treasury Bonds) to keep quiet as its tries to find a way out of the mess. So IMHO US will not only do nothing in the short to medium turn to anger China, in fact there may even be a level of appeasement.

Once the crisis is tackled then it’s likely that there's going to be a new world economic model built and that may not necessarily be one that China is used to or likes.

My reading is that for the next couple of years or so US will kowtow to China to make sure it does not rock the boat. However, after that there may be less bonhomie. I'm sure the Chinese leadership understands this. And so it may look at this two-year (or so) window of opportunity for China to pursue its geopolitical goals.

I also think that China will be very circumspect and would not like to chew off more than it can digest as it also need to ensure that nothing happens which it cannot control. It’s got a big crisis at home just like the US.

Coming back to the original premise of this thread, that's why in my last post I made the comment that in the event of a ganging up of US, China (with the Pukes in tow) India should give an irrational response (the N-threat).

For the US and China the top priority – even more than boxing India in - is to ensure world political stability. They can't tackle BOTH economic and political instability at the same time. So making them wear brown pants to hide the stain wouldn't be a bad option, IMHO.

JMT, please take it for what its worth.

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 24 Mar 2009 00:18

One basic thing that we never talk about is that when US lends its monies and exports stuff, it imposes huge controls and gains leverage in areas that go well beyond business. Take for example, the IMF, World Bank aids and why even through organizations such as UNICEF and other aid programs. Also, the countries fall themselves head over heals to give US all they can, including puppet PM, Presidents, blood of the people, land, and what not.

But when Chinese and other countries lend to US benefitting hugely the businessmen in US and only incidentally the exporting countries, it still becomes the problem of the countries. When developing countries save their hard earned monies it becomes “stocking away” and thus become vulnerable again politically and economically.

So, the problem is always with developing world be they borrow or lend, import or export, spend or save, it will come with tags and become evil people. Weird world!!

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 24 Mar 2009 01:10

Excellent discussion on the direction in which US bond mkts are headed... recommended read

Link

Some excerpts:

I think a succinct statement of Greg’s position is that the Treasury market is now rigged with the Fed stepping in a buyer.My simple response is that the $300 billion of Treasuries and the $200 billion of agency debt that the Fed will purchase is insignificant relative to the size of the markets. As an example, the Treasury will auction $98 billion of 2year,5 year and 7 year notes this week. So the $300 billion that the Fed has stated that it will purchase essentially covers this weeks series of auctions and the same series of auctions in April and May. That does not seem to be enough to me to irreparably harm the market.


since Bernanke has pretty much shut down the government bond markets, and has definitely destroyed all sense of market price discovery; is there any point in reporting spreads anymore?

Like you, I have watched b-fly and spread levels for years to get an indication of credit and economic activity… but as prices are now officially set by political decree, the spreads have little if any meaning

The Agency - Treasury basis has no meaning anymore — the prices of both are set by committee.
...
I know the mess of the markets the last few days is the immediate effect of Bernanke’s QE shenanigans — but I fear it will not be temporary. The bond vigilantes are all retired, and now it is only a question of when China will realize they have been had.

The government’s spending plans are truly something that we would expect from Hugo Chavez, not a competently run economy.


I agree there are still lots of things to trade, but not US Treasuries. The casino has officially announced that the games are fixed so that no customer will ever win. I don’t want to play in such a casino.

I was really saying that a spread to a politically determined price/yield has zero economic meaning

The Treasury market has no investment basis to it anymore. You are right that you can still trade it anyways — you can also trade on a roulette wheel or the roll of a dice. Neither of those has any investment merit to them. But more crucially, you have to be a fool to trade/bet on a loaded dice.

Bman — you are right that they said “up to” $300 billion. As Bernanke discovers just how foolish this announcement is, I suspect the reality will be a very small percentage of that… but the damage is done.

Once the US government officially announces that the debt market is a ponzi scheme, it won’t really fix things if a while later they are forced to announce “just kidding!”. The credibility is already lost


I would love to hear John (or whomever) explain how bid/ask spreads are going to remain anything close to what they were… if a market maker can lose 5% at the whim of a politician, that has to get reflected in a much wider bid/ask

Investment funds… if the market becomes less liquid, then it becomes much more difficult to create alpha. Without liquidity, arb trades become much more risky. How do you do a b-fly trade if you can’t sell short? If you can sell short, the haircut will have to be much much bigger (and thus the trade much less profitable). And if you make a directional bet, you need a much bigger move to overcome the wider spreads if you are right (and if you are wrong your losses will be bigger).

Essentially the Treasury market becomes buy and hold to maturity — and you don’t need lots of traders or PMs to do that (or bond blogs)

As for pension funds… HA! I would love to hear how anyone thinks they can defease 7% liabilities with a bond that yields half of that. Unless you have a liquid market, active trading isn’t going to make up the other 4-5%.

Most of the government bond markets around the world are FAR less liquid than the US. Even mighty Germany had a failed auction a couple months ago. The US used to be (past tense) the lone exception. Probably not anymore.


Read it all.

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Re: Perspectives on the global economic meltdown

Postby Ameet » 24 Mar 2009 01:11

The Big Takeover - The global economic crisis isn't about money - it's about power. How Wall Street insiders are using the bailout to stage a revolution

http://www.rollingstone.com/politics/st ... over/print

"They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."

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Re: Perspectives on the global economic meltdown

Postby ramana » 24 Mar 2009 01:18

Can we get hold of the Deutsche Bank report on future financial markets referred to in the Newsweek story "Power-Up"?

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Re: Perspectives on the global economic meltdown

Postby svinayak » 24 Mar 2009 01:24

http://www.theatlantic.com/doc/200903/m ... eography/6
So how do we move past the bubble, the crash, and an aging, obsolescent model of economic life? What’s the right spatial fix for the economy today, and how do we achieve it?

The solution begins with the removal of homeownership from its long-privileged place at the center of the U.S. economy. Substantial incentives for homeownership (from tax breaks to artificially low mortgage-interest rates) distort demand, encouraging people to buy bigger houses than they otherwise would. That means less spending on medical technology, or software, or alternative energy—the sectors and products that could drive U.S. growth and exports in the coming years. Artificial demand for bigger houses also skews residential patterns, leading to excessive low-density suburban growth. The measures that prop up this demand should be eliminated.

If anything, our government policies should encourage renting, not buying. Homeownership occupies a central place in the American Dream primarily because decades of policy have put it there. A recent study by Grace Wong, an economist at the Wharton School of Business, shows that, controlling for income and demographics, homeowners are no happier than renters, nor do they report lower levels of stress or higher levels of self-esteem.

And while homeownership has some social benefits—a higher level of civic engagement is one—it is costly to the economy. The economist Andrew Oswald has demonstrated that in both the United States and Europe, those places with higher homeownership rates also suffer from higher unemployment. Homeownership, Oswald found, is a more important predictor of unemployment than rates of unionization or the generosity of welfare benefits. Too often, it ties people to declining or blighted locations, and forces them into work—if they can find it—that is a poor match for their interests and abilities.

As homeownership rates have risen, our society has become less nimble: in the 1950s and 1960s, Americans were nearly twice as likely to move in a given year as they are today. Last year fewer Americans moved, as a percentage of the population, than in any year since the Census Bureau started tracking address changes, in the late 1940s. This sort of creeping rigidity in the labor market is a bad sign for the economy, particularly in a time when businesses, industries, and regions are rising and falling quickly.

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Re: Perspectives on the global economic meltdown

Postby ramana » 24 Mar 2009 01:50

The atlantic article is quite rethink on the question of Home Onwership. In fact margret Thatcher was credited with re-igniting UK's Home Onwership figures which led to the creation of strong middle class in UK. Previously most people lived in Labor govt built housing as renters and had a very non-asset owning class behavior- renters syndrome. So is Atlantic throwing away the lessons of Thatcherite Conservatism that Reagan adopted?

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Re: Perspectives on the global economic meltdown

Postby Raja Bose » 24 Mar 2009 03:11

Ameet wrote:"They had some back room somewhere where a bunch of Indian guys who'd been doing nothing but math for God knows how many years would come up with some kind of model saying that this or that combination of debtors would only default once every 10,000 years," says one young trader who sold CDOs for a major investment bank. "It was nuts."


This statement says it all about the BS which is pervasive on Wall Street. It is all the other guys faults....so convenient for Mr. Young Trader to blame some nameless quants for the problem. Ofcourse since Mr.Young Trader knew all about the subterfuge and was activitly involved in selling it, what does that make him?

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 24 Mar 2009 03:53

This statement says it all about the BS which is pervasive on Wall Street. It is all the other guys faults....so convenient for Mr. Young Trader to blame some nameless quants for the problem. Ofcourse since Mr.Young Trader knew all about the subterfuge and was activitly involved in selling it, what does that make him?


Was talking about the cost competitiveness of Chandrayaan ($80 mn project cost) compared to the jap and chini probes (~$500 mn approx each) the other day. Reactions were telling. With good reason. Many G7 areas are no longer cost competitive on a fair basis. New trade barriers will be erected by these worthies under pious excuses like labor or envt standards all the while mouthing platitudes on how protectionism is bad etc etc.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 24 Mar 2009 07:25

PRC prepping to dump the USD or what? They've seldom shied away from big power plays. But this could be a tad too far.

China calls for new reserve currency

China’s central bank on Monday proposed replacing the US dollar as the international reserve currency with a new global system controlled by the International Monetary Fund.

In an essay posted on the People’s Bank of China’s website, Zhou Xiaochuan, the central bank’s governor, said the goal would be to create a reserve currency “that is disconnected from individual nations and is able to remain stable in the long run, thus removing the inherent deficiencies caused by using credit-based national currencies”.


I suspect its more tactical maneuvering than strategic play.

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Re: Perspectives on the global economic meltdown

Postby ramana » 24 Mar 2009 07:36

Its more like the dance of the rattler and the scorpion. And both want to live and kill the other.

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 24 Mar 2009 07:38

vsudhir wrote:I suspect its more tactical maneuvering than strategic play.

It is time for our commie janta and parties to prop up China "internationally" and lock them down at the highest levels on this proposal and get an international committment. After that their H&D will take care of it. This gives us deniability and buy time instead of exposing ourselves too much. I am sure Russia will join Chinese bandwagon and so will the Asian nations.

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Re: Perspectives on the global economic meltdown

Postby Singha » 24 Mar 2009 09:47


vsudhir
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Re: Perspectives on the global economic meltdown

Postby vsudhir » 25 Mar 2009 07:19

U.K. leader hears advice from banks about G-20

Top executives from 13 major banks around the world urged Prime Minister Gordon Brown of Britain on Tuesday not to push at the G-20 meeting for short-term regulatory measures that could damage economic recovery.


Meanwhile,

Weak pound pushes up prices in Britain :((
Last edited by vsudhir on 25 Mar 2009 23:42, edited 1 time in total.

vsudhir
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Re: Perspectives on the global economic meltdown

Postby vsudhir » 25 Mar 2009 07:37

Impressive. The bond mkts have spoken. There is hope after all. AoA.

California Sells $6.54 Billion of General-Obligation Bonds

California on Tuesday finished selling $6.54 billion of general-obligation bonds, surpassing its original goal of $4 billion.

The sale was the nation's largest ever long-term general-obligation deal, and the third-largest tax-exempt offering in U.S. history, said the office of state Treasurer Bill Lockyer.

About $2.6 billion of the funds will be used to restart public-works projects halted over the winter as the state faced a cash shortfall because of a $42 billion budget deficit, which was resolved last month after Gov. Arnold Schwarzenegger and the state legislature agreed to a new spending plan. "This is a great result for California's workers, businesses and economy," Mr. Lockyer said in a statement. "Investors stepped up and showed their confidence in California."

Of the $6.54 billion, California sold $3.2 billion to individual investors. Institutional investors, such as mutual funds, bought the rest. The sale began Monday and was to conclude Wednesday, but the treasurer concluded the sale a day early because of "huge demand," the office said.

The yields are between 3.20 and 6.10, the treasurer's office said.


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Re: Perspectives on the global economic meltdown

Postby Singha » 25 Mar 2009 08:31

IHT

Immigrants' dreams deferred in U.S.
By Maria Sacchetti The Boston Globe
Published: March 24, 2009


BOSTON: Amar Sharma is about to earn a master's degree from the Massachusetts Institute of Technology, an achievement he hoped would land him a high-flying post in the United States. But if he doesn't find a job soon, he could end up back in India.

Not far from M.I.T., Bedardo Sola is devastated by the loss of his janitorial job at Harvard University. The layoff plunges two households into jeopardy: his family here, and the daughter he supports in El Salvador.

Soaring unemployment is hammering families across the United States, and it is having a particular impact on immigrants. In addition to their livelihoods, foreign-born workers could lose their work permits and their hope for a future in the United States. Even naturalized U.S. citizens lose the source of the money they send to relatives back home.

But as unemployment rises, so does friction over immigration, with lawmakers and others calling for increased restrictions on foreign workers to preserve U.S. citizens' jobs, while advocates warn that immigrants will be crucial to any economic recovery.

There is no single measure to determine how immigrants are faring in the recession. Most immigrants are in a vulnerable demographic, concentrated at the high and low ends of the economy, in the battered construction and hospitality industries as well as in finance and high technology. Those most at risk are often poor, less educated, and not fluent in English.


Several signs point to a dramatic nationwide slowdown, according to the Migration Policy Institute, the Inter-American Development Bank, and the Pew Hispanic Center, all based in Washington. Illegal immigration has not increased significantly since 2006; money transfers to Latin America dropped late last year for the first time in nearly a decade; and unemployment for Latino immigrants soared from 5 percent to 8 percent last year.

Immigrants are "faring the same, and probably, in many cases, worse than the rest of us, especially if they're working in the underground economy," said George Noel, director of the Massachusetts Department of Labor, who is conducting an inquiry into the state's low-wage work force.

Affecting the high end of the economic spectrum, Congress just banned companies that receive federal bailout money from replacing laid-off American workers with skilled foreign workers admitted to the United States under the H-1B visa program. It will be issuing up to 85,000 visas a year starting April 1, but the program came under fire recently when some companies cutting jobs applied for foreign workers.

Some voices are clamoring for more federal restrictions on immigration to preserve jobs at the low end of the economy. According to a study late last year, immigrants without a high-school diploma had lower unemployment rates than native-born Americans, particularly blacks and Latinos. Of such immigrants, 11 percent were unemployed, as against 25 percent of blacks and 16 percent of U.S.-born Latinos.

"We should not entertain any increases in immigration," said Steven Camarota, director of research for the Center for Immigration Studies, the Washington research group that conducted the study. "It doesn't make sense to keep adding to the population that's getting clobbered."

Still, analysts like Demetrios G. Papademetriou, president of the Migration Policy Institute. say that so far, the public debate appears focused on corporate scandals and the use of federal bailout money, and not on immigrants.

"The big target is what has been happening on Wall Street and the banking sector," Mr. Papademetriou said. "So far, it's the greed."

Across Massachusetts, unions, immigration lawyers, and advocates are mobilizing to protect workers' rights, holding rallies, and even referring workers to counseling for depression and stress. Some workers have to leave the country if they lose their jobs. Others have permission to stay, but they might still be under intense pressure to send money home.

At local union hall recently, Mr. Sola held his head in his hands after he was laid off from his job cleaning a Harvard dormitory. Mr. Sola, who is in the United States legally, said he sends hundreds of dollars a month home to a 10-year-old daughter with an autoimmune disorder.

"I didn't come to this country to be a dependent," said Mr. Sola, 42. "I want to work."

Union workers are fighting the layoff, saying it occurred without regard to seniority. And they are criticizing Harvard for the cost-cutting that led to the layoffs of workers who take some of the hardest jobs.

Kevin Galvin, a Harvard spokesman, said the university was facing "unprecedented fiscal challenges" and was cutting in many areas, including imposing a salary freeze on faculty and nonunion staff. Galvin said a subcontractor, not Harvard, was carrying out the layoffs. The subcontractor did not respond to a request for comment.

Meanwhile, professionals like Mr. Sharma are scouring career centers, networking at coffee shops and cocktail parties, and appealing to college alumni for help.

Mr. Sharma is about to earn a master's degree in engineering and management from the Massachusetts Institute of Technology after working for several years for International Business Machines in Kansas and in his native India. At 30, he helps support his mother, a government clerk, and a younger brother.

He has not had a job interview since January. He wants to be an information technology strategist, but if he does not find work in the next few months, he would probably have to take a lower-paying job in India to pay off $80,000 in loans.

"I never thought things were going to go bad," he said. "I thought the moment I graduated everything would be all right."

Laila Shabir, a 22-year-old M.I.T. undergraduate from the United Arab Emirates, said the recession was so bad that she had decided to delay graduation to keep hunting for a job.

"I go to M.I.T. and study economics and I have a great résumé," said Ms. Shabir, the daughter of a plumber and a housewife. "Why am I having such a hard time finding a job?"

Others are worried that a backlash against foreign workers could hurt the U.S. economic recovery. A year ago, the Canadian province of Alberta launched a program to attract workers in the United States on H-1B visas. Since April, more than 2,000 people have applied, drawn by the easier immigration system and the "open spaces" and "blue skies" that Alberta touts (promotions leave out the subzero temperatures). More than 300 have been nominated to come to Canada so far.

George Bruno, an immigration lawyer in New Hampshire, says the program was "draining our brain power."

"At some point our economy is going to bounce back," he said. "And when it does, who's going to be better positioned, Canada or the United States?"

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Re: Perspectives on the global economic meltdown

Postby Raja Bose » 25 Mar 2009 08:39

We are receiving about 250-300 screened resumes a week for the past several weeks for 1 golddarn intern position...not even full-time! My boss is snowed under piles of resumes from all these TFTA places but no hope is sight for most of them. It is really sad what the greed of other people, does to the livelihood and hopes of the rest. :roll:

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Re: Perspectives on the global economic meltdown

Postby svinayak » 25 Mar 2009 09:30

Fired Doctor of Derivatives Waits to Cry as Finance Jobs Vanish

By Lisa Kassenaar and Stephanie Baker
http://www.bloomberg.com/apps/news?pid= ... =exclusive

March 24 (Bloomberg) -- Raj and Nita Godhania are drinking Nescafe in their one-bedroom apartment in Princeton, New Jersey. Valentine cards are taped to otherwise bare walls, and a stack of blue Rubbermaid boxes towers over the TV. Their daughters, 12 and 7, have been helping pack.

Merrill Lynch fired Raj on Jan. 22 after he’d worked on the bank’s technology systems for 10 years. He got a promotion in 2006, sold his house in London, gave away the dog and moved his family to the U.S. Now, he’s scrambling to leave before his nine weeks of severance runs out and his L-1 work visa -- his right to be in the country -- is void because he’s out of a job.

Half a dozen calls to Merrill in three weeks -- some furious, some teary -- have yielded nothing, says Nita on a wintry February Friday. The New York-based firm so far has refused to pay the family’s $10,000 moving expense, buy four one-way plane tickets or help figure out how to let the children finish the school year, they say. Nita can’t work without a permit, and Raj, 45, has little time to find another company to sponsor him. The two British citizens don’t qualify for U.S. unemployment benefits.

“Merrill Lynch left us on the streets,” says Nita, 39, who now nurses a chronic headache. “I’m just so angry and scared. What the hell is going to happen to us?”

Quarter-Million Jobs

The shakeout in global banking has untethered more than a quarter of a million people, most of them in New York and London, who thought they were in secure, well-paying jobs. Some were investment bankers and traders who, with cheap credit and a gambler’s view of risk, raked in millions of dollars in annual bonuses over the past five years. Others, like Raj Godhania, greased the wheels at companies once seen as pillars of corporate strength, such as Citigroup Inc., UBS AG and Merrill Lynch & Co.

All are now displaced, forced to reflect on their fall and to find their way in a job market where the biggest U.S. and European banks may spill tens of thousands more workers before the carnage is over. By some measures, these folks are lucky: They’re well educated and have some money to fall back on. Still, bankers are struggling with a plunge in prestige -- and little sympathy -- after a decade-long orgy of ramping up leverage and flogging subprime debt that has left the world’s economy in tatters and taxpayers with the bill. In London in February, demonstrators hanged a mannequin dressed in a tie and bowler hat from Marble Arch.

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Re: Perspectives on the global economic meltdown

Postby milindc » 25 Mar 2009 10:16

Why the sudden panic ?
Obama dismisses idea of single global currency

US President Barack Obama and his top two economic officials on Tuesday dismissed suggestions by emerging economic powers that the
world move away from using the dollar as the world's main reserve currency.

"I don't believe that there's a need for a global currency," Obama told a prime-time televised news conference, adding that the dollar is "extraordinarily strong right now".


Poodles also reiterating the same
Australia's Prime Minister Kevin Rudd also knocked down the global currency idea, telling a Washington audience late on Monday that the dollar's position as the reserve currency remains unchallenged.

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Re: Perspectives on the global economic meltdown

Postby Singha » 25 Mar 2009 10:22

how did they manage to rent a one bed apt with 2 kids ?

BBC:-

Japan's February exports halved
By Roland Buerk
BBC News, Tokyo


The latest economic figures from Japan show exports in February were down by a record 49.4% compared to the same month a year earlier.

The world's second largest economy is suffering badly in the downturn as demand for its products have collapsed.

The new data follows figures for January which showed year on year exports nearly halved that month too.

Exports are important for Japan, so the global downturn is affecting the country particularly badly.

It was a new record after a fall of 45.7% in January.

Demand for Japanese products is collapsing around the world as fearful consumers cut back.

Exports of cars were down by more than 70%.

But Japan's trade balance was in surplus in February after a record deficit in January, because the decline in exports was offset by a sharp fall in imports.

Japan's economy shrank by an annualized 12.1% in the last three months of 2008, the biggest contraction among developed countries

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Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 25 Mar 2009 16:31

How the Obama bailout was calculated by their economic team --- using Kentucky Math

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Re: Perspectives on the global economic meltdown

Postby amol.p » 25 Mar 2009 17:01

Adrija wrote:The "global savings imbalance" spout is pretty much BS....... reality is that the world- led by the US consumer- pretty much overconsumed above sustainable levels. This excess demand was fueled/ supported by cheap credit, and the economic gurus, thought that level of demand was sustainable. That, combined with the excess liquidity, led to the asset prices becoming inflated above sustainable trend line.

Now that someone finally woke up and popped the cork, led to asset prices falling. The US is trying to arrest that fall in prices through quantitative easing (IOW, cheap credit all over again) but I am not personally not sure if it's going to work the second time around. But personally moi thinks the process is more aimed at managing the decline, coz of social pressures, than any fundamental challenge to US economic supremacy

Anyways, in the entire process, Unkil will come out fine and dandy, thank you- Chipanda and al others who built their entire economic model around supplying to US and accepting paper in return, are screwed anyways, as I think we on BRF already know

JMT/ IMVVVHO, of course


very truly said....imbalance due to saving is pure BS
1] Why saving rate is higher in asian countries than in USA.....bcoz asian countries want its people to save money vice versa USA govt wants people to keep on spending so that private companies are in profit
2] Asian countries always want to bailout people first and then companies vice versa situation is in USA.
3] It was with pure intention of USA govt which kept interest rate low for years ( Fd,recurring & other saving schemes) so that people dont invet in them and either spend on buying or invest in share market 7 related funds

its very clear that the whole recession has been brought by policies of USA govt to keep private companies in profit and loot common people which failed at some point.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 25 Mar 2009 18:21

Latest victim of recession: US jails

The economic crisis is forcing lawmakers to take a more pragmatic approach to crime and sentencing. Some states are closing prisons, while others have replaced jail time with community programs.


EU president blasts U.S. economic stimulus

The prime minister of the Czech Republic, which holds the European Union presidency, described the U.S. stimulus measures as the "way to hell."


Huh? Really? And what would you rather do, sir? nothing?

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 25 Mar 2009 21:44

x-post
Tanaji wrote:Less demand for the UK government bonds

http://news.bbc.co.uk/1/hi/business/7963815.stm


The shock and horror onlee.

Expect moody's and snp etc to further upgrade Ukstani sovereign credit ratings now.

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Re: Perspectives on the global economic meltdown

Postby Singha » 25 Mar 2009 22:48

whats better than AAA ? :lol:

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Re: Perspectives on the global economic meltdown

Postby Kamal_raj » 25 Mar 2009 22:52

Sorry this message is ot

Vsudhir

You really make good points but what's the point of this continious gloating about U.K going down the drain it becomes boring after a point don't you think.

Believe me we are all on the same boat and laughing and continiously picking on U.K going down makes everybody else look silly. Believe me there are many looking at the blog and thinking......

I wish well for the U.K because I live in this country, I know you wish well for U.S because you live in U.S

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 25 Mar 2009 23:40

kamal_raj,

Tks for the perspective. There are many things I find boring. Nobody compels anyone to read boring stuff. Read what one finds worthwhile, ditch the rest.

BTW, I don't wish ordinary Britons ill. Just not a fan of the UKstani establishment - rearer of TSP and pawner of India in the great game that continues to this day - is all.

/Have a nice day.
Last edited by vsudhir on 26 Mar 2009 03:03, edited 1 time in total.

vsudhir
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Re: Perspectives on the global economic meltdown

Postby vsudhir » 26 Mar 2009 02:11

Hey, seems like a whole bunch of yawn-worthy, half-a$$ed ideas are getting slow traction in unlikely places after all....

Japanese think tank calls for common Asian currency

A report by the Institute for International Policy Studies, a semigovernmental think tank, which asserted that "in order for the entire Asian region to keep growing, [Japan] must create the third-polar regime in Asia by introducing the Asian common currency, which stands on par with the U.S. dollar and the euro."


Using sthink tanks == semi-formal trial ballooning onlee. Clearly, no govt is prepared to talk openly yet. But still, worry's writ large everywhere and we all know that crisis alone dislodges comfy status quo symbiotic with vested interests.

Who knows what tomorrow brings?
Last edited by vsudhir on 26 Mar 2009 03:03, edited 1 time in total.

ramana
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Re: Perspectives on the global economic meltdown

Postby ramana » 26 Mar 2009 02:17

its a good idea to have a balance to the Euro and Dollar. Need some measure of fixity or stability in values not subject to vagaries of printers presses.

vsudhir
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Re: Perspectives on the global economic meltdown

Postby vsudhir » 26 Mar 2009 03:06

ramana wrote:its a good idea to have a balance to the Euro and Dollar. Need some measure of fixity or stability in values not subject to vagaries of printers presses.


I know Ramana garu.

A certain other garu here unloaded on ideas of intra-asian trade in bonds (primarily USD denominated). Was thinking along the same line only.

So, Ocenia, Eastasia and Eurasia might endup becoming realities after all, eh? The Amero in the Americas, the Euro is Eurostan and now the Asio(?) in Asia, eh?


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