Perspectives on the global economic meltdown

ramana
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Re: Perspectives on the global economic meltdown

Postby ramana » 10 Aug 2009 23:37

Can we also keep sight of the G-8 and BRIC economies in terms of GDP as marker please?

Muppalla
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Re: Perspectives on the global economic meltdown

Postby Muppalla » 11 Aug 2009 01:06

Singha wrote:sorree...I am out of touch for 5 yrs now after r2i.

I was reading a NYT article yesterday how coffee shops are shutting down
power outlets and wifi to discourage people who sit with laptops and crowd
out lunch and eating customers. people could wfh I suppose , dont see why
only coffee shops can make people creative...a close friends wife was even
hit on by a enterprising student at one such place for a cup of coffee together...when she refused he even had the chutzpah to say all he wanted was a coffee! :roll:

http://www.nytimes.com/2005/06/13/techn ... 3wifi.html


The following blog may be a good barometer:

http://www.eeekonomy.com/

Hari Seldon
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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 11 Aug 2009 06:22

Geithner Asks Congress to Increase Federal Debt Limit

And if not, treasury will go ahead and do the right thing anyway, no? Lawd knows they've found enough ways of circumventing, stalling, diverting and confusing a clueless congress as it is.

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Re: Perspectives on the global economic meltdown

Postby svinayak » 11 Aug 2009 11:43

I was looking for this

Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are www.webofdebt.com and www.ellenbrown.com.


Web of Debt


The Wall Street Ponzi Scheme

http://www.webofdebt.com/articles/deriv ... saster.php
The Ponzi scheme that has gone bad is not just another misguided investment strategy. It is at the very heart of the banking business, the thing that has propped it up over the course of three centuries. A Ponzi scheme is a form of pyramid scheme in which new investors must continually be sucked in at the bottom to support the investors at the top. In this case, new borrowers must continually be sucked in to support the creditors at the top. The Wall Street Ponzi scheme is built on "fractional reserve" lending, which allows banks to create "credit" (or "debt") with accounting entries. Banks are now allowed to lend from 10 to 30 times their "reserves," essentially counterfeiting the money they lend. Over 97 percent of the U.S. money supply (M3) has been created by banks in this way.2 The problem is that banks create only the principal and not the interest necessary to pay back their loans, so new borrowers must continually be found to take out new loans just to create enough "money" (or "credit") to service the old loans composing the money supply. The scramble to find new debtors has now gone on for over 300 years – ever since the founding of the Bank of England in 1694 – until the whole world has become mired in debt to the bankers' private money monopoly. The Ponzi scheme has finally reached its mathematical limits: we are "all borrowed up."

When the banks ran out of creditworthy borrowers, they had to turn to uncreditworthy "subprime" borrowers; and to avoid losses from default, they moved these risky mortgages off their books by bundling them into "securities" and selling them to investors. To induce investors to buy, these securities were then "insured" with credit default swaps. But the housing bubble itself was another Ponzi scheme, and eventually there were no more borrowers to be sucked in at the bottom who could afford the ever-inflating home prices. When the subprime borrowers quit paying, the investors quit buying mortgage-backed securities. The banks were then left holding their own suspect paper; and without triple-A ratings, there is little chance that buyers for this "junk" will be found. The crisis is not, however, in the economy itself, which is fundamentally sound – or would be with a proper credit system to oil the wheels of production. The crisis is in the banking system, which can no longer cover up the shell game it has played for three centuries with other people's money.

The Derivatives Chernobyl

The latest jolt to the massive derivatives edifice came with the collapse of Bear Stearns on March 16, 2008. Bear Stearns helped fuel the explosive growth in the credit derivative market, where banks, hedge funds and other investors have engaged in $45 trillion worth of bets on the credit-worthiness of companies and countries. Before it collapsed, Bear was the counterparty to $13 trillion in derivative trades. On March 14, 2008, Bear's ratings were downgraded by Moody's, a major rating agency; and on March 16, the brokerage was bought by JPMorgan for pennies on the dollar, a token buyout designed to avoid the legal complications of bankruptcy. The deal was backed by a $29 billion "non-recourse" loan from the Federal Reserve. "Non-recourse" meant that the Fed got only Bear's shaky paper assets as collateral. If those proved to be worthless, JPM was off the hook. It was an unprecedented move, of questionable legality; but it was said to be justified because, as one headline put it, "Fed's Rescue of Bear Halted Derivatives Chernobyl." The notion either that Bear was "rescued" or that the Chernobyl was halted, however, was grossly misleading. The CEOs managed to salvage their enormous bonuses, but it was a "bailout" only for JPM and Bear's creditors. For the shareholders, it was a wipeout. Their stock initially dropped from $156 to $2, and 30 percent of it was held by the employees. Another big chunk was held by the pension funds of teachers and other public servants. The share price was later raised to $10 a share in response to shareholder outrage, but the shareholders were still essentially wiped out; and the fact that one Wall Street bank had to be fed to the lions to rescue the others hardly inspires a feeling of confidence. Neutron bombs are not so easily contained.

The Bear Stearns hit from the derivatives iceberg followed an earlier one in January, when global markets took their worst tumble since September 11, 2001. Commentators were asking if this was "the big one" – a 1929-style crash; and it probably would have been if deft market manipulations had not swiftly covered over the approaching catastrophe. The precipitous drop was blamed on the threat of downgrades in the ratings of two major monoline insurers, Ambac and MBIA, followed by a $7.2 billion loss in derivative trades by Societe Generale, France's second-largest bank. Like Bear Stearns, the monolines serve as counterparties in a web of credit default swaps, and a downgrade in their ratings would jeopardize the whole shaky derivatives edifice. Without the monoline insurers' traiple-A seal, billions of dollars worth of triple-A investments would revert to junk bonds. Many institutional investors (pension funds, municipal governments and the like) have a fiduciary duty to invest in only the "safest" triple-A bonds. Downgraded bonds therefore get dumped on the market, jeopardizing the banks that are still holding billions of dollars worth of these bonds. The downgrade of Ambac in January signaled a simultaneous downgrade of bonds from over 100,000 municipalities and institutions, totaling more than $500 billion.3




In India, public sector banks also operate alongside private sector banks. Privatization has made significant inroads into India’s banking system, but fully 80 percent of the country’s banks are still government-owned. Before the current crisis, neoliberals criticized India’s public banks for being oriented more toward serving the customer than turning a profit; but studies showed that the public sector banks were out-performing the private sector banks in terms of customer satisfaction. Today, when the credit crisis has hit the aggressive private international banks particularly hard, customers are fleeing into the safety of India’s public sector banks, which have emerged largely unscathed from the credit debacle. The public banks have been credited with keeping the country’s financial industry robust at a time when the private international banks are suffering their worst crisis since the 1930s.

In China, private-sector banking has also made some inroads; but state-owned banks still predominate. In a June 2009 article titled “The Chinese Puzzle: Why Is China Growing When Other Export Powerhouses Aren’t?”, Brad Setser noted that nearly all countries relying heavily on exports for growth have experienced major downturns and remain in the doldrums -- except for China. When China’s external markets fell off, the government turned its credit machine inward to domestic development. Its state-owned banks engaged in a huge increase in lending, with local governments and state enterprises borrowing on a large scale. The result was to create a real fiscal stimulus that put workers to work and got money circulating again in the economy.

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Re: Perspectives on the global economic meltdown

Postby Neshant » 11 Aug 2009 13:27

I was thinking of getting that book.

Has anyone read it and can you give a book review.

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Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 11 Aug 2009 15:19

Got this in mail..

Five Reasons the Market Could Crash This Fall
BY: GRAHAM SUMMERS


With all this blather about “green shoots” and economic “recovery” and new “bull market,” I thought I’d inject a little reality into the collective financial dialogue. The following are ALL true, all valid, and all horrifying… Enjoy.

1) High Frequency Trading Programs account for 70% of market volume High Frequency Trading Programs (HFTP) collect a ¼ of a penny rebate for every transaction they make. They’re not interested in making a gains from a trade, just collecting the rebate.
Let’s say an institutional investor has put in an order to buy 15,000 shares of XYZ company between $10.00 and $10.07. The institution’s buy program is designed to make this order without pushing up the stock price, so it buys the shares in chunks of 100 or so (often it also advertises to the index how many shares are left in the order).
First it buys 100 shares at $10.00. That order clears, so the program buys another 200 shares at $10.01. That clears, so the program buys another 500 shares at $10.03. At this point an HFTP will have recognized that an institutional investor is putting in a large staggered order.
The HFTP then begins front-running the institutional investor. So the HFTP puts in an order for 100 shares at $10.04. The broker who was selling shares to the institutional investor would obviously rather sell at a higher price (even if it’s just a penny). So the broker sells his shares to the HFTP at $10.04. The HFTP then turns around and sells its shares to the institutional investor for $10.04 (which was the institution’s next price anyway).
In this way, the trading program makes ½ a penny (one ¼ for buying from the broker and another ¼ for selling to the institution) AND makes the institutional trader pay a penny more on the shares.
And this kind of nonsense now comprises 70% OF ALL MARKET TRANSACTIONS. Put another way, the market is now no longer moving based on REAL orders, it’s moving based on a bunch of HFTPs gaming each other and REAL orders to earn fractions of a penny.
Currently, roughly five billion shares trade per day. Take away HFTP’s transactions (70%) and you’ve got daily volume of 1.5 billion. That’s roughly the same amount of transactions that occur during Christmas (see the HUGE drop in late December), a time when almost every institution and investor is on vacation.
HFTPs were introduced under the auspices of providing liquidity. But the liquidity they provide isn’t REAL. It’s largely microsecond trades between computer programs, not REAL buy/sell orders from someone who has any interest in owning stocks.
In fact, HFTPs are not REQUIRED to trade. They’re entirely “for profit”
enterprises. And the profits are obscene: $21 billion spread out amongst the 100 or so firms who engage in this (Goldman Sachs (GS) is the undisputed king controlling an estimated 21% of all High Frequency Trading).
So IF the market collapses (as it well could when the summer ends and institutional participation returns to the market in full force).
HFTPs can simply stop trading, evaporating 70% of the market’s trading volume overnight. Indeed, one could very easily consider HFTPs to be the ULTIMATE market prop as you will soon see.
TAKE AWAY 70% of MARKET VOLUME AND YOU HAVE FINANCIAL ARMAGEDDON.

2) Even counting HFTP volume, market volume has contracted the most since
1989 Indeed, volume hasn’t contracted like this since the summer of 1989.
For those of you who aren’t history buffs, the S&P 500’s performance in 1989 offers some clues as what to expect this coming fall. In 1989, the S&P 500 staged a huge rally in March, followed by an even stronger rally in July.
Throughout this time, volume dried up to a small trickle.
What followed wasn’t pretty.


Anytime stocks explode higher on next to no volume and crap fundamentals you run the risk of a real collapse. I am officially going on record now and stating that IF the S&P 500 hits 1,000, we will see a full-blown Crash like last year.

3) This Latest Market Rally is a Short-Squeeze and Nothing More To date, the stock market is up 48% since its March lows. This is truly incredible when you consider the underlying economic picture:
normally when the market rallies 40%+ from a bear market low, the economy is already nine months into recovery mode. Indeed, assuming the market is trading based on earnings, the S&P 500 is currently discounting earnings growth of 40-50% for 2010. The odds of that happening are about one in one million.
A closer examination of this rally reveals the degree to which “junk”
has triumphed over value. Since July 10th:

The 50 smallest stocks have outperformed the largest 50 stocks by 7.5%.
The 50 most shorted stocks have beaten the 50 least shorted stocks by 8.8%.

Why is this?
Because this rally has largely been a short squeeze.
Consider that the short interest has plunged 72% in the last two months.
Those industries that should be falling the most right now due to the world’s economic contraction (energy, materials, etc.) have seen the largest drop in short interest: Energy -90%, Materials -94%, Financials -86%.
In simple terms, this rally was the MOTHER of all short squeezes. The fact that it occurred on next to no volume and crummy fundamentals sets the stage for a VERY ugly correction.
4) 13 Million Americans Exhaust Unemployment by 12/09 A lot of the bull-tards in the media have been going wild that unemployment claims are falling. It strikes me as surprising that this would be true given the fact that virtually every company that posted the alleged “awesome” earnings in
2Q09 did so by laying off thousands of employees:

Yahoo! (YHOO) will cut 675 jobs.
Verizon (VZ) just laid off 9,000 employees.
Motorola (MOT) plans to lay off 7,000 folks this year.
Shell (RDS.A) has laid off 150 management positions (20% of management).
Microsoft (MSFT) plans to lay off 5,000 people this year.

So unemployment claims are falling, that means people are finding jobs right? Wrong. It means that people are exhausting their unemployment benefits. When you consider that there are 30 million people on food stamps in the US (out of the 200 million that are of working age:
15-64) it’s clear REAL unemployment must be closer to 16%.
And they’re slowly running out of their government lifelines.
The three million people who lost their jobs in the second half of
2008 will exhaust their benefits by October 2009. When you add in dependents, this means that around 10 million folks will have no income and virtually no savings come Halloween.
Throw in the other four million who lost their jobs in the first half of
2009 and you’ve got 13 million people (counting families) who will be essentially destitute by year-end.
How does this affect the stock market?
The US consumer is 70% of our GDP. People without jobs don’t spend money.
People who are having to work part-time instead of full-time (another nine
million) spend less money than full time employees. And people who are forced to work shorter work weeks (current average is 33, an ALL TIME LOW), have less money to spend.
Wall Street makes a big deal about earnings (earnings estimates, earnings forecast, etc), but when it comes to economic growth, sales are the more critical metric. Companies can increase profits by reducing costs temporarily, but unless actual top lines increase, there is NO growth to be seen. No revenue growth means no hiring, which means no uptick in employment, which means greater housing and credit card defaults, greater Federal welfare (unemployment, food stamps, etc), etc.
So how will corporate profits perform as more and more consumers become part-time, unemployed, or destitute? Well, so far profits have been awful.
And that’s BEFORE we start seeing millions of Americans losing their unemployment benefits.
click to enlarge

With the S&P rallying on these already crap results… what do you think will happen when reality sets in during 3Q09?
5) The $1 QUADRILLION Derivatives Time Bomb Few commentators care to mention that the total notional value of derivatives in the financial system is over $1.0 QUADRILLION (that’s 1,000 TRILLIONS).
US Commercial banks alone own an unbelievable $202 trillion in derivatives.
The top five of them hold 96% of this.
By the way, the chart is in TRILLIONS of dollars:

As you can see, Goldman Sachs alone has $39 trillion in derivatives outstanding. That’s an amount equal to more than three times total US GDP.
Amazing, but nothing compared to JP Morgan (JPM), which has a whopping $80 TRILLION in derivatives on its balance sheet.
Bear in mind, these are “notional” values of derivatives, not the amount of money “at risk” here. However, if even 1% of the $1 Quadrillion is actually at risk, you’re talking about $10 trillion in “at risk.”
What are the odds that Wall Street, when allowed to trade without any regulation, oversight, or audits, put a lot of money at risk? I mean… Wall Street’s track record regarding financial instruments that were ACTUALLY analyzed and rated by credit ratings agencies has so far been stellar.
After all, mortgage backed securities, credit default swaps, collateralized debt obligations… those vehicles all turned out great what with the ratings agencies, banks risk management systems, and various other oversight committees reviewing them.
I’m sure that derivatives which have absolutely NO oversight, no auditing, no regulation, will ALL be fine. There’s NO WAY that the very same financial institutions that used 30-to-1 leverage or more on regulated balance sheet investments would put $50+ trillion “at risk”
(only 5% of the $1 quadrillion notional) when they were trading derivatives.
If Wall Street did put $50 trillion at risk… and 10% of that money goes bad (quite a low estimate given defaults on regulated securities) that means $5 trillion in losses: an amount equal to HALF of the total US stock market.
This of course assumes that Wall Street only put 5% of its notional value of derivatives at risk… and only 10% of the derivatives “at risk” go bad.

Do you think those assumptions are a bit… low?


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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 11 Aug 2009 21:16

Real Cities in Uneasy Truce With Tent Cities

Last summer, police responding to complaints about campfires under a highway overpass found dozens of homeless people living on public land along the Cumberland River.

Eviction notices went up -- and then were suspended by Nashville Mayor Karl Dean, a Democrat, who said housing for the homeless should be found first.

A year later, little has been found -- and Nashville, with help from local nonprofits, is now servicing a tent city, arranging for portable toilets, trash pickup, a mobile medical van and visits from social workers. Volunteers bring in firewood for the camp's 60 or so dwellers.

Nashville is one of several U.S. cities that these days are accommodating the homeless and their encampments, instead of dispersing them...

In Florida, Hillsborough County plans to consider a proposal Tuesday by Catholic Charities to run an emergency tent city in Tampa for more than 200 people. Dave Rogoff, the county health and services director, said he preferred to see a "hard roof over people's heads." But that takes real money, he said: "We're trying to cut $110 million out of next year's budget."

Ontario, a city of 175,000 residents about 40 miles east of Los Angeles, provides guards and basic city services for a tent city on public land.

A church in Lacey, Wash., near the state capital of Olympia, recently started a homeless camp in its parking lot after the city changed local ordinances to permit it. The City Council in Ventura, Calif., last month revised its laws to permit sleeping in cars overnight in some areas. City Manager Rick Cole said most of the car campers are temporarily unemployed, "and in this economy, temporary can go on a long time."...

Municipal leniency isn't universal. New York City officials last month shut down a tent city on a vacant lot in East Harlem....

Some homeless are battling mental illness or addictions, or both. Municipal officials in the U.S. acknowledge the tent cities can breed crime and unsanitary conditions, but with public shelter scarce, they say they have to weigh whether to spend police time to break up encampments that are likely to resurface elsewhere.

Pastors in Champaign, Ill., last week asked the City Council to allow people to live in organized tent communities of as many as 50 people. Legalizing the camps is more compassionate and cost-effective than forcing "poor people who are camping because they have a lack of better choices to constantly have to fear being rousted and cited by police," says Joan Burke, advocacy director for Sacramento Loaves & Fishes, a homeless-assistance agency.

In Nashville, Mr. Harris, director of the city's homeless commission, said tent cities have existed for years, but he has seen the numbers surge. He now knows of 30 encampments. While some people are chronically homeless, he said, foreclosures have forced others into the streets, as has Tennessee's 10.8% unemployment rate, the highest in 25 years...

The city and local nonprofits have found permanent housing for about 25 people from the tent city.

Many haven't been so lucky. David Olson, 47 years old, said last week he and his wife wound up under the Nashville overpass after he lost a job making cement pipes in Iowa four months ago. The couple came to Nashville for a remodeling job that turned out to be a scam. "I've got five years' experience in carpentry and 10 years' roofing and I can't find a job," he said.

Mr. Olson, his arms and shirt caked with dirt, said life is hard in the swampy woods. The couple woke up to mud after a night of rain. His wife said she is frightened by the dogs that roam around the encampment.

As mosquitoes buzzed, they tried to set up camp on higher ground. They struggled to secure a tarpaulin over their tent to keep out the rain. Mr. Olson's wife, holding onto a pole to prop up the tarp, cried. "I'm not used to living like this."


Sad. Media is busy playing green shoots tunes rather than report from ground level.

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Re: Perspectives on the global economic meltdown

Postby AnimeshP » 11 Aug 2009 23:03

Hari Seldon wrote:Real Cities in Uneasy Truce With Tent Cities
Sad. Media is busy playing green shoots tunes rather than report from ground level.


Well its not only the media playing green shoots that is the problem ... The people are still fighting on who is to blame ... any discussion in any forum related to American politics or economy devolves into "Its Bush's fault ... No, its Obama's fault" scream fest by the end of page 1 and continues ad-infinitum ... same with the media ... :roll:

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Re: Perspectives on the global economic meltdown

Postby Singha » 11 Aug 2009 23:10

I figure only manufacturing revival can get these folks back to work.

that means erecting some trade barriers against chinese goods to make domestic manufacture of low end goods viable.

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Re: Perspectives on the global economic meltdown

Postby derkonig » 12 Aug 2009 14:33

Singha wrote:I figure only manufacturing revival can get these folks back to work.

that means erecting some trade barriers against chinese goods to make domestic manufacture of low end goods viable.


That will not happen. Low end manufacturing is gone for good from the shores of the developed world. Even if they are to try, the cost differential shall be so high that the 'domestic' goods cannot compete with the panda junk in terms loosening the purse string of the avg. joe/jane. It is unlikely at this stage that we shall see any major economic activity from the US & the developed world. The only way out for the avg.joe/jane IMHO is to cut expenses and wait it out till the economy stabilizes. Besides, be assured that messiah hussian-al-soviet-socialisti will do his best to drag down the khan economy to the levels of the baki economy. I eagerly await the day bakstan gives aid to the Soviet Socialist Republics of Estrados Unidos. AoA.

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Re: Perspectives on the global economic meltdown

Postby SwamyG » 12 Aug 2009 14:44

Anybody read the book "Life, Inc" ? It is fascinating, I bought the book....it talks about "Corporatism"; the evolution of Corporation as an entity and its impact on our life.

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Re: Perspectives on the global economic meltdown

Postby Singha » 12 Aug 2009 17:00


Hari Seldon
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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 12 Aug 2009 21:18

Tough times in the smut industry

More examples of wage freezes, price wars and general deflation from all over the NA continent.

Price wars grip Canada's grocery stores
Inflation is unwinding and, according to the country's largest grocer, sales volumes in the sector are starting to decline. Now Loblaw Cos. Ltd. has signalled it's ready to drop prices on thousands of products to keep customers coming to its stores. Its rivals vow to remain competitive, which could spark a price war.

Last week, Loblaw slashed prices by between 10 and 25 per cent on about 3,000 products in its stores in Atlantic Canada. This week, Loblaw followed suit at its Zehrs stores in the hard-hit region of southwestern Ontario, while also providing a 10-per-cent break to unemployed people shopping at those outlets.

“We're not prepared to lose market share,” Dalton Philips, chief operating officer at Loblaw, said in an interview Monday. “You've got to keep current and you've got to be prepared to fight to keep strong. We have no intention of backing down and not retaining our No. 1 place.”


Dayton firefighters union accepts wage freeze

Blogger Mish writes:
This is a start, but only a start. Pension benefits will have to be scaled back for existing workers and eliminated for new hires. Moreover, cities need to consider privatizing all such services to reduce costs.


Wage freeze in the newspaper industry

Legal pay reaches Apogee

Now we know the sky is falling....when lawyers' pay takes a hit....

There's nothing quite like the burning smell of deflation on a Monday morning. NALP has released its associate salary survey. The good news is that the median starting salary for associates is $130,000. The bad news is that there is no way on God's green earth that the median salary is going to stay that high.

The silver lining in the statistics is that they are only statistics. Individual results will vary and vary greatly. There are still plenty of firms paying $160,000. The dream is still alive, they're just giving it out to fewer and fewer people.


Quebec's Largest Pension Fund Takes Huge Losses On Real Estate

And this after record losses of ~$40 bn last qtr.

Tech industry never spared anyway...
Pay Cuts of 30 Percent at Hewlett Packard

Hewlett-Packard Co. is cutting some EDS workers' pay again, this time by up to 30 percent or more, according to some angry employees. H-P would not confirm the size of the pay reductions, though it did not dispute the reports of cuts ranging up to more than 30 percent.

This is the third pay cut for EDS workers this year, on top of roughly 25,000 layoffs announced last September after H-P completed its $13.9 billion purchase of the company.

Several EDS workers said in e-mails and blog comments that the new round of pay cuts would apply only to U.S. employees. H-P, which has been notifying affected workers over the last several days, did not respond to requests for confirmation of those comments.

Several workers said the cuts would be very deep for them. Some making roughly $75,000 said they would see their salaries slashed to about $55,000, about 27 percent. "I know that my career with this company is coming to an end," the man, who spoke on the condition of anonymity, said in a follow-up phone interview. "I can't survive after this kind of hit."


It reads like a litany of woe. And scares the bejeezes outta moi boor soul. Where are we headed, who knows?


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Re: Perspectives on the global economic meltdown

Postby Chinmayanand » 13 Aug 2009 02:27

RBS uber-bear issues fresh alert on global stock markets

"I expect this risk rally to continue into – and maybe through – a large part of August. What happens after that? The next ugly leg of the bear market begins as we get into the July through September 'tipping zone', driven by the failure of the data to validate the V (shaped recovery) that is now fully priced into markets."

The key indicators to watch are business spending on equipment (Capex), incomes, jobs, and profits. Only a "surge higher" in these gauges can justify current asset prices. Results that are merely "less bad" will not suffice.

He expects global stock markets to test their March lows, and probably worse. The slide could last three months. "A move to new lows is highly likely," he said.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 13 Aug 2009 15:41

OMG, can this really be happening?

Hunger hits Detroit's middle class (CNN)

As the area's economy worsens --unemployment was over 16% in July -- food stamp applications and pantry visits have surged.

Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased.

But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients.

"We've seen about a third more people than before," said Jean Hagopian, a volunteer at the New Life food pantry, part of the New Life Assembly of God church in Roseville, a suburb some 20 miles northeast of Detroit. Hagopian said many of the new people seeking assistance are men, former breadwinners now in desperate need of a food basket.


No excuse really for unkil to any longer subsidize TSP or ej programs in otherwise peaceful lands like Yindia. Kindly mind your own house first. Bring in Universal healthcare to look after the sick and sickening millions. Shut down those excess fwd bases and consulates and stuff. I know long shot but times are a changin' and who knows sri obama may mean hope and change really for a change...

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 13 Aug 2009 17:16

Aha, not meaning to quote myself but but....
No excuse really for unkil to any longer subsidize TSP or ej programs in otherwise peaceful lands like Yindia. Kindly mind your own house first. Bring in Universal healthcare to look after the sick and sickening millions. Shut down those excess fwd bases and consulates and stuff. I know long shot but times are a changin' and who knows sri obama may mean hope and change really for a change...


Above finds some support here [from Automatic Earth]
"We are roughly where Britain was in 1968," said one. That year Prime Minister Harold Wilson decided to abandon all of Great Britain's obligations east of Suez. That included the entire Persian Gulf, from Oman to Kuwait, the Strait of Hormuz, British special agents in all the emirates and sheikhdoms, local constabularies with British officers, the fabled Trucial Oman Scouts (TOS) -- all for the bargain basement cost of $40 million a year.

{Hmmm. Was it also after 1968 that UK stan stopped wet-dreaming and publicly calling for India's balkanization?}

As the British and other colonial empires faded into history, America's global empire grew topsy-turvy and since the collapse of the Soviet empire in 1989, its power grew unchallenged. The two tycoons, who did not wish to be quoted, agreed with a rapidly growing segment of the U.S. population that says America can no longer afford the astronomic costs of empire.


Re. that last bolded part, what, pray, might the costs of empire be? Read on

With more than 2.5 million U.S. military personnel serving across the planet and 737 military bases spread across each continent, and 3,800 installations in the United States, a reassessment of roles and missions is long overdue. The estimated $1 trillion in overdue infrastructure repairs and modernization strikes many as an overdue priority.

The 2010 defense budget is a shade shy of $700 billion, more than two-thirds of a trillion dollars, which now tops the rest of the world -- including major players Britain, France, Germany, Japan, Russia, China, India -- put together. Add all the defense expenditures neatly tucked into the budgets for Energy, State, Treasury, Veterans Affairs, and 16 intelligence agencies, and the numbers top $1 trillion.


Hmmm you say? How much of a burden is that?

With only 5 percent of the world's population, it is still remarkable that the United States can maintain global military superiority on less than 5 percent of gross domestic product. But from the world's biggest creditor, the United States has become the world's largest debtor, coupled with a rapid decline of a manufacturing sector once hailed as the arsenal of democracy and an annual per capita trade deficit of $2,000 per citizen.

U.S. share of global output continues to decline from year to year. Like General Motors Corp. and Ford, the United States has yielded share of the global market from one-third at the turn of the new century to one-quarter today. Was the rise of the rest the decline of the West?

Have U.S. commitments and responsibilities outstripped resources? The two anonymous billionaire voices were among the many now saying so in public opinion polls. They feel a paradigm shift is inevitable. We are yet to wean ourselves from the old paradigm: the $3 billion we borrow each and every day -- principally from China -- to maintain the world's highest standard of living, based on conspicuous consumption, at a time of growing world shortages. And when we are finally weaned, it will become glaringly obvious that we were living way beyond our means and that major belt-tightening is long overdue.


In his projections through 2025, Thomas Fingar, the former chief analyst for the 100,000-strong U.S. intelligence network, which includes 16 agencies with a budget of $50 billion, predicted the international system would be transformed over the next 15 years as dramatically as it was after World War II. As China rises to global prominence, the United States would be declining. "In terms of size, speed and directional flow," wrote Mr. Fingar, "the transfer of global wealth and economic power now under way -- from West to East -- is without precedent in modern history."

Following Mr. Fingar's analysis, former deputy Treasury Secretary Robert Altman wrote in Foreign Affairs, the official organ of the Council on Foreign Relations, that the current financial crisis is "a major geopolitical setback for the U.S. and Europe" that could only accelerate trends that are moving the global center of gravity to China. And this is something that a staggering $1 trillion for defense (in a budget with a projected $2 trillion federal deficit) would be powerless to reverse.

The pessimistic outlook should, of course, be tempered by the fact that IBM spins off more technology patents in a typical year than all of China. Three-quarters of the world's top universities are in America. So any loss of influence is at this stage attributable to reckless profligacy at every level of American society, beginning with the federal government and the mind-numbing bonuses that Wall Street's "Masters of the Universe," as Tom Wolfe called them in his 1987 best-seller "Bonfire of the Vanities," have lavished on themselves Roman Empire-style.

Both global entrepreneurs mentioned at the beginning of this column believe Israel will resolve its existential crisis by bombing Iran's key nuclear facilities later this year. One thought Gulf Arabs would be secretly delighted and that Iran's much vaunted asymmetrical retaliatory capabilities would fizzle as the theocracy imploded. The other could see mayhem up and down the Gulf, the Strait of Hormuz closed, and oil at $300 per barrel.

link

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Re: Perspectives on the global economic meltdown

Postby Singha » 13 Aug 2009 18:09

I am reading a book on the history of Byzantium, the greco-roman empire centered on constantinople that rose to prominence as the western half of the roman empire collapsed and weakened under the attacks of goths, visigoths, vandals and franks.

It is astonishing the kind of power and prestige Constantinople had for nearly 1000 years.....straddling both the land and sea routes of importance. and it was able to resist all sieges bar one where the crusaders sacked it.

one thing that came out - as the roman empire weakened and Rome was not able to control it properly, they divided it into east and west empires under a senior emperor each who would enact joint laws applicable in both halves and act in concert. each senior had a junior emperor to assist and take over.

looking at Khan, they are going to need powerful allies to protect mutual interests in far parts of the globe. propping up terrorist regimes as a means to keep potential rivals off-balance has run its course and only the myopic and stupid would continue to think its going to be business as usual down that route.

south korea, brazil, turkey, russia, india, south africa, mexico, indonesia, thailand, malaysia could be key allies if khan stopped playing zero sum games and clinging to unipolar notions.

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Re: Perspectives on the global economic meltdown

Postby ramana » 13 Aug 2009 21:02

In the wild west they had deputy sherrifs appointed by the sheriff to assist.

Anyway whats the title and who is the author for there are quite a few books on that subject.

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 13 Aug 2009 21:22

Foreclosure plague: No cure yet

The foreclosure plague continued to devastate last month.

There were more than 360,000 properties with foreclosure filings -- including default notices, scheduled auctions and bank repossessions -- an increase of 7% from June and 32% from July 2008, according to RealtyTrac, an online marketer of foreclosed homes. In fact, one in every 355 U.S. homes had at least one filing during July.

"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," said James J. Saccacio, chief executive officer of RealtyTrac. "Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 13 Aug 2009 21:28

Listen to Elizabeth Warren in this clip and you get to see the backbone, the steel, and dare I say it - the integrity - of the people who made America a great nation, despite the scamsters, warmongers and bankers running amok there.

Elizabeth Warren "We Have A Real Problem Coming" on MSNBC

She's an academic, a Harvard prof, invited to head the congressional oversight panel on TARP. The earthiness and honesty of being one of the people rather than one of the elites shows through.

Liz Warren, you rock!

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Re: Perspectives on the global economic meltdown

Postby Singha » 13 Aug 2009 22:59

yes Khan still has a core of high caliber patriots....less so now than in decades past. maybe with public support they can stem the rot but dont bet too much on it.

Ramana, I will post it tomorrow. in logistical terms each resident of constantinople (upto 600,000 at its peak) was given free bread and circus shows by royal decree (old roman formula to keep citizens pacified). each summer fleets of ships brought wheat from egypt which was stored and baked daily. water cisterns inside 3 layers of fortifications could sustain for a long time and aqueducts brought in water from 140km away. when the ottoman turks took egypt and chased away the fleet, wheat was brought from greece across the aegean sea. they were in constant war against first zorastrian persian empire, slavs, bulgars and goths and often sought alliances and played one against the other.

but lost most of their empire to the persians at one point, heraklios son of the kind of carthage (modern moroco?) was sent across the
med to restore order. he became king and prepared for a decade to
take on persia. finally he unleashed a long series of mil campaigns,
deposed the persian shah of shahs and captured most major cities there.

unfortunately, heraklios could not stem the arab tide and the arab caliphates for the first time permanently took away north africa, egypt, palestine-israel and eastern turkey & persia from Byzantine hands. after that is was a long decline to barely hold on to constantinople, greece, macedonia and few adjoining areas.

however by blocking the eastern flank of europe, islam could only
enter a more roundabout weak way via spain sea route and finally
the franks and others managed to turn the tide.

the author claims by disrupting the entire trade system around the
mediterranean, the muslims forced northern europe to dig deep,
explore and open trade links among themselves which led to industrial revolution in germany, denmark, netherland, baltic states, england and france http://en.wikipedia.org/wiki/Hanseatic_League

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 14 Aug 2009 11:56

Economist bilge. Seeks to lecture Yindia on a problem that doesn't even concern us. UKstani nervousness is showing, no doubt.
Beijing, Bangkok and Bangalore: beware boastfulness
It is easy to boost an economy with lots of government spending. But Asian policymakers now face two difficult problems. Their immediate dilemma is how to sustain recovery without inflating credit and asset-price bubbles. Local equity and property markets are starting to froth. But policymakers’ reluctance to let their currencies rise faster against the dollar means that their monetary policy is, in effect, being set by America’s Federal Reserve, and is therefore too lax for these perkier economies. The longer-term challenge is that once the impact of governments’ fiscal stimulus fades, growth will slow unless economic reforms are put in place to bolster private spending—something Japan, alas, never did (see article).

Part of the solution to both problems—preventing bubbles and strengthening domestic spending—is to allow exchange rates to rise. If Asian central banks stopped piling up reserves to hold down their currencies, this would help stem domestic liquidity. Stronger currencies would also shift growth from exports to domestic demand and increase households’ real spending power—and help ward off protectionists in the West.

Hubris is the big worry. With the gap in growth rates between emerging Asia and the developed world heading towards a record nine percentage points this year, Chinese leaders have taken to warning America about its lax monetary policy (while Washington has stopped lecturing China about the undervalued yuan). But it would be a big mistake if Asia’s recovery led its politicians to conclude that there was no need to change their exchange-rate policies or adopt structural reforms to boost consumption. The tigers’ faster-than-expected rebound from their 1997-98 financial crisis encouraged complacency and delayed necessary reforms, which left them more vulnerable to the global downturns in 2001 and now. Make sure this new rise is not followed by another fall.


And there the farticle ends. Pray why was B'lore or Bangkok for that matter, mentioned at all in the sub heading, eh?

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 14 Aug 2009 13:25

Interesting commentary dealing with the question - what if the indebted households of America revolt by invoking their N-option i.e. walking away from their debt? Recommended read!

Debtor's Revolt?
But does it therefore follow that sustained debt repayment will be the response of a household sector in the U.S. with destroyed asset holdings and high debt? To our way of thinking, it is unclear. This is especially the case with respect to mortgage indebtedness; U. S. households have non-recourse mortgage loans and can walk away from their debts rather than pay them down.
...
In many respects, the Argentina example of 2001 is instructive. True, the economics are not completely analogous here because Argentina repudiated foreign debt to get out of an externally imposed debt deflation, whereas here we are discussing the crushing burden of domestic debt on the part of the US household sector. Still, in many ways, the ultimate effect is the same and Argentina’s repudiation could well have implications for the US, were American households to embrace a similar tactic.

After Argentina abandoned the dollar peg, the peso collapsed, leaving the country with a horribly burdensome deflationary foreign debt repayment program foisted on it by the IMF (yet again making the world safe for US investment banks at the expense of everybody else) as a condition for further economic assistance.

But then President Nelson Kirchner threatened to forego debt repayment to the country’s foreign creditors in the event that the IMF continued to insist on being repaid in a manner which didn't deflate the country into the ground.

In effect, Kirchner called the bluff of the IMF and he won. Argentina repudiated its debts and immediately started to grow again, led by exports from a vastly depreciated peso. The IMF continued to insist that Argentina would remain cut off from the foreign debt markets whilst the country refused to repay its foreign debts. But the threat was exposed for the hollow one it was: the reality was that Argentina didn't need to subject themselves to the poisoned chalice which the IMF was offering as a condition of obtaining yet more foreign credit. (As an aside, a government’s ability to spend and service its debt is only unlimited if the payments are made in the government’s own sovereign currency, which makes the whole notion of Argentina borrowing in dollars – thereby adding an unnecessary external constraint on growth – nonsensical as a future growth strategy.)
...
Ironically, by overplaying their hand, the banks might be forcing the households to adopt an approach that will ultimately weaken the banks and expose them as the emperor with no clothes. They will take huge hits to their capital if faced with widespread debt repudiation. Now, I expect you'll get a host of lawsuits and the very essence of the law of contract will come under attack if this scenario occurs, but the average American household might feel he has no choice and Obama might accommodate himself to these populist winds as he did in the Chrysler case, in effect overturning years of established bankruptcy law with no particular political cost to himself.


Read it all.

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Re: Perspectives on the global economic meltdown

Postby Neshant » 14 Aug 2009 13:41

Fundamentals of the economy are strong

http://www.youtube.com/watch?v=oAKGyhiE7SE

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 14 Aug 2009 14:04

What McCain thought in 12/2007 is old news now. McCain must be thanking his stars he's not in the hot seat right now. Knowing his khanomic skills, he'd go down in history rivalling Hoover himself, I suspect. Sri Obama may yet prseide over catastrophe. With McCain, that outcome was pretty much guaranteed.

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Re: Perspectives on the global economic meltdown

Postby vishwakarmaa » 14 Aug 2009 15:33

Neshant wrote:----
Fed Laundering Money through the Big Banks Into the Stock Market
http://www.marketoracle.co.uk/Article12507.html

It means the revered professor Bernanke figured out a way to circumvent Congress and dump more than a trillion dollars into the stock market by laundering the money through the big banks and other failing financial institutions. As Kessler suggests, Bernanke knew the liquidity would pop up in the equities market, thus, building the equity position of the banks so they wouldn't have to grovel to Congress for another TARP-like bailout. Bernanke's actions demonstrate his contempt for the democratic process. The Fed sees itself as a government-unto-itself.

Zero Hedge: "Most interesting is the correlation between Money Market totals and the listed stock value since the March lows: a $2.7 trillion move in equities was accompanied by a less than $400 billion reduction in Money Market accounts!


Its not new or shocking. It has been going on since decades.

Thats how American superpower has been maintained through cheating and forgery. Americans are a master race, they beat even Chinese at it.

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Re: Perspectives on the global economic meltdown

Postby vishwakarmaa » 14 Aug 2009 15:39

In other words, American Federal Reserve saved the american banks from falling and being taken over by foreigners by "printing" dollars and infusing them into markets. In "Free Economy", it requires that these American banks sell their stakes to foreign banks and raise money but that never happen because Fed. jumps in to provide US banks protection from market forces.

Imagine if Indian Government printed "rupees" and just infused into system, there wouldn't be a single IT-vity or industry with any % of western ownership.

Its as simple as it gets - keep the asians out of ownership from American banking systems at all costs and ask the Asians to open up their banks so Americans can print "dollars" in arbitrary manner and buy them up.

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Re: Perspectives on the global economic meltdown

Postby joshvajohn » 14 Aug 2009 16:25

If US economy is to recover then reduce spending on war - then give extra monitary support on the lower middle class or those who have lower income - provide them jobs or make sure there is a bit more income to them as the basic food expenses have gone up. the best way is to cut a bit more taxes for them so that they can manage their lives without trying to save money for future rather spend. The same to be followed in other countries as well.

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Re: Perspectives on the global economic meltdown

Postby vishwakarmaa » 14 Aug 2009 16:57

joshvajohn wrote:If US economy is to recover then reduce spending on war - then give extra monitary support on the lower middle class or those who have lower income - provide them jobs or make sure there is a bit more income to them as the basic food expenses have gone up. the best way is to cut a bit more taxes for them so that they can manage their lives without trying to save money for future rather spend. The same to be followed in other countries as well.


That sounds like reading GITA(free economy and fair-play principles) to a donkey(USA).

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Re: Perspectives on the global economic meltdown

Postby vishwakarmaa » 14 Aug 2009 17:02

Best solution is to convert USA into a baniya yindian economy and divert all management controls to Indians. Thats the only way to save the world from greeds of war-mongerers and good for all.

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Re: Perspectives on the global economic meltdown

Postby Tanaji » 14 Aug 2009 19:16

Hari Seldon wrote:Interesting commentary dealing with the question - what if the indebted households of America revolt by invoking their N-option i.e. walking away from their debt? Recommended read!

Debtor's Revolt?
.......
...


After Argentina abandoned the dollar peg, the peso collapsed, leaving the country with a horribly burdensome deflationary foreign debt repayment program foisted on it by the IMF (yet again making the world safe for US investment banks at the expense of everybody else) as a condition for further economic assistance.

But then President Nelson Kirchner threatened to forego debt repayment to the country’s foreign creditors in the event that the IMF continued to insist on being repaid in a manner which didn't deflate the country into the ground.

In effect, Kirchner called the bluff of the IMF and he won. Argentina repudiated its debts and immediately started to grow again, led by exports from a vastly depreciated peso. The IMF continued to insist that Argentina would remain cut off from the foreign debt markets whilst the country refused to repay its foreign debts. But the threat was exposed for the hollow one it was: the reality was that Argentina didn't need to subject themselves to the poisoned chalice which the IMF was offering as a condition of obtaining yet more foreign credit. (As an aside, a government’s ability to spend and service its debt is only unlimited if the payments are made in the government’s own sovereign currency, which makes the whole notion of Argentina borrowing in dollars – thereby adding an unnecessary external constraint on growth – nonsensical as a future growth strategy.)
...


Read it all.


Hari-ji

Please read the comment posted in your link:
Wow where to start? That's just (excuse the expression) horseshit. Argentina defaulted on its foreign debt before it devalued, several presidents before Kirchner. Kirchner repaid the IMF in full and ahead of schedule. Depositors in the Argentine banking system were not so lucky, dollar deposits being redenominated into pesos and withdrawals restricted.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 14 Aug 2009 19:24

vishwakarma,

Is it just me or have you lost your shirt to the schemes of the US fin services industry? :P

Disclosure: my pet punching bag is UK-stan. Now, while I may dislike the UK, I try not to let the aversion degenerate into hostility (theostility?).

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 14 Aug 2009 20:21

Tanaji ji

Quite possible. No great knowledge of the Argentine affair.

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Re: Perspectives on the global economic meltdown

Postby John Snow » 14 Aug 2009 21:34

The defacto currency of Zimbabwae is USD. No one trades in Zimb Dollars as it lost its meaning.
The first step towards some economic stability. The hotels take SA rand, plus any other like Euro, USD, UK Pound Sterling but not Zimb dollar also customs and govt offices like Visa fees etc.


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Re: Perspectives on the global economic meltdown

Postby Singha » 15 Aug 2009 10:24

Snowji pls save some of those $10 trillion dollar notes. should be collectors items on the
market in a few years

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Re: Perspectives on the global economic meltdown

Postby Singha » 15 Aug 2009 13:38

BBC


Biggest US bank failure this year


Colonial BancGroup has become the biggest US bank to collapse this year.

Colonial, a property lender based in Montgomery, Alabama, had about $25bn of assets, said the US regulator, the Federal Deposit Insurance Corp (FDIC).

The agency approved the sale of Colonial's $20bn in deposits to BB&T, a North Carolina-based bank. BB&T will also buy $22bn of Colonial's assets.

The collapse is expected to cost the FDIC about $2.8bn. The total number of bank failures is now over 70 in 2009.

The FDIC also entered into a loss-sharing agreement on about $15bn of Colonial's assets with BB&T, the regulator said.

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Re: Perspectives on the global economic meltdown

Postby shyamd » 15 Aug 2009 16:59

The Attack on the Dollar Was Not Averted. No Consensus on Iran
The first sign that President Barack Obama's Moscow visit was a letdown came after he ended is talks with President Dmitry Medvedev and prime minister Vladimir Putin Tuesday, July 7 in a statement by the Kremlin's top economic adviser Arkady Dvorkovich to journalists:

“Russia will continue to advocate at the meeting of the G8 leading nations this week the need to develop a new international reserve currency."

Speaking of an immediate opportunity for some currencies to play a bigger regional role as reserve currencies at the G8 summit, Dvorkovich said: "We will, alongside China, stress the need to gradually develop a global financial system, which will be based on several new strong regional currencies."

"With time, those new currencies will then take on a more global character."

The Russian official denied Moscow was trying to undermine the US dollar as a reserve currency. Nevertheless, the US president's Russian hosts tried to make sure that Obama would arrive at his first G8 summit starting the next day in the Italian town of l'Aquila on the wrong foot, after failing in his main purpose, generally unreported, of deflecting or at least softening the assault on the dollar.

Obama struck back swiftly. Before the G8 deliberations began on July 8, he managed to get the dollar issue scratched from the industrialized nation's summit agenda.

Russia's main partner in the attack on the dollar, Chinese president Hu Jintao, was meanwhile forced to leave the G8 summit, reducing it to a G7, in order to deal with by the rising ethic violence in Xinjiang. But the assault, in which India too plans to take part, was only postponed. All three will go ahead with their bid to develop a new reserve currency to compete with the US dollar.

Putin has the muscle to back his campaign against the dollar, having amassed for Russia the world’s third-largest cash stockpile of almost $600 billion prior to the global economic recession.

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Re: Perspectives on the global economic meltdown

Postby Neshant » 16 Aug 2009 15:18

Great article on the west feared Indian demand for gold could sink their economy and steps taken to loot India of its gold throughout history.

My personal view is the next great robbery is the promotion of "paper gold" aka gold ETFs in India to absorb/divert demand for physical gold. ETFs like GLD are a great scam where the buyer thinks he's buying a share of physical gold but if you read the prospectus, what he's actually buying is 'gold and gold investments'. Exactly what 'gold investments' are is never clearly stated (could be dollars or morgage backed securities for all you know). Plus the buyer has no rights to ask for an audit of the gold the ETF allegedly holds which means the vaults could be empty or have multiple claims on the gold even while the ETF continues to suck in money.

http://2ndlook.wordpress.com/2007/11/10 ... t-economy/


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