Perspectives on the global economic meltdown

ArmenT
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Re: Perspectives on the global economic meltdown

Postby ArmenT » 17 Oct 2009 09:45

http://news.bbc.co.uk/2/hi/business/8311446.stm

This one is a good one folks. Involves Intel, IBM, Mckinsey and two hedge funds.
Six face insider trading charges

A leading US hedge fund boss and five other people have been arrested on charges linked to insider trading.

Raj Rajaratnam, founder of the Galleon Group, and the other defendants, are alleged to have pocketed about $20m (£12m) in illegal profits.

Prosecutors claimed the insider trading also took place at the New Castle hedge fund and Intel Capital, the investment arm of microchip giant Intel.

The others charged in the case include Rajiv Goel, a director of strategic investments at Intel Capital; and Robert Moffat, senior vice president in the systems and technology division of computer group IBM.

They are joined by Anil Kumar, a director at global management-consulting firm McKinsey & Co; and Danielle Chiesi and Mark Kurland of New Castle Partners.

Mr Rajaratnam's insider trading is said to have taken place between January 2007 and July 2007.

US attorney Preet Bharara told a press conference that it was the largest hedge fund case ever prosecuted.

The last statement is rather puzzling though given that the profit is stated as $20 million. If this is the largest hedge fund case prosecuted, maybe the lawmakers aren't looking hard enough.

Incidentally, one of the accused, Mr. Raj Rajaratnam, is the richest Sri Lankan man.

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Re: Perspectives on the global economic meltdown

Postby Singha » 17 Oct 2009 10:31

outside the 'core' anglo-jewish establishment as in gsachs etc. low political risk to prosecute such cases and can be shown that something was done.

bread and circus for the masses.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 17 Oct 2009 16:22

Distilled gyan here folks....worth a read, IMO.

A wiseguy (Fed reserve aspirant no doubt) 'proved' how the game the central banks are currently playing can in theory continue forever. The sound of 1 hand clapping only.

Below is a brilliant takedown. Answers questions knowledgebly all over the place.

The Fed is not omnipotent, especially in comparison to the weight of the collective that will be ranged against it once the market turns. If it were possible to print one's way out of trouble then we would never have seen periods of deflation historically. No one can print confidence. All they can do is to play confidence games temporarily - promising to stand behind everything, knowing perfectly well that it's a promise they could not keep. They hope that by making it, they will not have to keep it, but the market is very good at calling desperate bluffs like that.

The market will turn when confidence does, and I believe that will be soon. As I have said before, this will not lead to an imminent bond market dislocation. First I would expect a flight to safety and record low nominal interest rates. IMO a bond market dislocation, where rates shoot up into the double digits, is perhaps a year away, at an initial guess. When it happens it will be because everyone will be trying to borrow (this being a global crisis) and few of the very small number of parties still able to lend will wish to do so, due to tremendous (and entirely understandable) risk aversion.

The global economy is not a machine that can be directed with appropriate levers. It is a messy, subjective and thoroughly irrational human construct. Crowd psychology is the most important element to understand in predicting what it will do next.

IMO we will see the Fed revealed as essentially powerless (as the little man behind the curtain) as the next leg of this crisis unfolds. It was never a public service duty bound to trash its own balance sheet for the supposed wider benefit, although it has done so to some extent. IT has limits, and we are going to see them soon enough.


As stocks fall, we should see the US dollar rise, the Canadian dollar and the Euro fall, gold and silver fall, and oil fall. We should see nominal interest rates fall to record lows (perhaps even moderately negative nominal rates), although the on-going collapse of credit will mean high interest rates in real terms, so that the central bankers will still be 'pushing on a string'. As bond yields fall, prices should rise.

A bond market dislocation (where interest rates spike up and government spending is slashed to the bone) comes further down the line.


The bond market will prevent printing. Debt junkie economies are dependent on access to international debt financing, and that will not be available to nations that print. There will be far more nations trying to borrow than willing to lend, and that is a recipe for much higher rates (once the initial panic, flight to safety and record low rates are over).

All the Fed is doing is adding to the huge number of excess claims created by the credit hyper-expansion. The underlying real wealth pie is still the same size, but more and more mutually exclusive claims are being produced, and these surplus claims are destined to be extinguished en masse in a deflationary collapse.

The Fed is granting these additional excess claims to the very people who were instrumental in causing the problem in the first place, and who are in the best position to know that claims to real wealth will only be worth anything if they are cashed in before the herd tries to cash in. Essentially, the claims of the public are being actively subverted to an even greater extent, as by the time they try to cash out there will be nothing left. The little guy never gets an even break.


We will eventually see a default. It is simply inevitable. You just can't keep kicking the can down the road indefinitely. However, just because a default is inevitable does not mean it is imminent. A flight to safety is a knee-jerk reaction to threat. It is not a rational response and does not look at the reality of the dollar's position. A rush to the dollar is something people will do on an emotional imperative, and it will push up the value of the dollar substantially. Betting on a dollar carry trade is therefore a sucker play - evidence of an imminent dollar bottom in fact.

The dollar should first rise and then collapse in value. I would expect the rising phase to last perhaps a year. When the collapse happens it will probably coincide with the coming bond market dislocation. However, the value of the dollar relative to other currencies will be much less important in practice than the value of cash in relation to available goods and services domestically.


The anger and recrimination that are coming this time will be something almost none of us have any experience with, and it will be terribly easy to be caught up in it. Don't do it, as that kind of vengeful and punitive mindset will drain energy and resources from what you need to do to help yourself and your loved ones. Ultimately it fractures the trust that holds society together at a time when cohesiveness matters most. While this is inevitable at a national scale, it need not be at a very local level where a few individuals can make a difference.


link
read it all.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 17 Oct 2009 17:40

Liz Warren on the current state of the US fin sector.

Listen to a true American patriot (yup, the genuine variety) talk.

Elizabeth Warren on Bank Bonuses, Power of Bank Lobbies

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Re: Perspectives on the global economic meltdown

Postby Neshant » 17 Oct 2009 19:29


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Re: Perspectives on the global economic meltdown

Postby Neshant » 18 Oct 2009 01:14

Interesting situation going on in Latvia where the real estate market has blown up on the Swedish and German banks.

http://www.youtube.com/watch?v=Rj4crMCg-XY

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 18 Oct 2009 07:35

^ Yup, the Latvia problem is an interesting watch. The wider implications are that it could be the trigger that exposes the implosion-readiness of the large EUrostani banking cartels. Reports suggest that Eu banks face a worse leverage ratio than even the US banks did in 2007!

Meanwhile, if you thought the wall street bailouts, thanks to which the fed balance sheet showed unprecedented expansion and national debt jumped straight from 70% to 90% of GDP in the space of 3 months, was a BIG deal, wait for what's coming..... a likely comprehensive bailout package for entire states and municipalities that are all clearly underwater and could implode anytime.

State Revenue Falls Most Since 1963 on Incomes, Sales

“We’re looking at a multiyear problem hitting essentially every state,” Robert Ward, the institute’s deputy director, told reporters. “It has happened during recessions before, but the depth of this decline is unprecedented in modern times.”

Collections dropped in 49 states in the second quarter as sales and personal-income taxes slid for the third consecutive period, the institute said. Income tax was down 27.5 percent and sales tax fell down 9.5 percent, its study said. Both categories fell by the most in 45 years.

States are anticipating more cuts to current-year budgets, already pared once to bring them into balance. Mississippi Governor Haley Barbour told managers on Oct. 13 to cut spending 5 percent because tax collections in the first three months of fiscal 2010 were 7.7 percent below estimates. Florida Governor Charlie Crist told department heads on Oct. 12 not to request more money for next year, when the state faces a $2.6 billion deficit.

“It’s clear that when governors propose their budgets in January, the vast preponderance will be looking for more spending cuts and tax increases,” Boyd said.

Alaska’s tax income declined the most of any state, the study said, with an 86.5 percent drop because of lower oil prices. Vermont fared the best, with a 2.2 percent gain because of a one-time estate-tax settlement.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 18 Oct 2009 20:56

Finally, unkil sam seems to be getting his regulatory act together.

For too long have wall street biggies gotten away with daylight robbery of taxpayer backstops to their bad loans.

Take the case of the biggest gainer of them all - GS. See, after sept 2008, Goldman sachs became a bank holding company partly because that legal status allows it to raise capital more cheaply. The catch is that it also comes with more regulatory oversight under SEC rules. Goldman, by becoming a bank holding company agreed to be thus regulated.

So, imagine my pleasant surprise when only this week, the SEC hired a 29-year old former Goldman employee to head its enforcement division as chief operating officer!

Wow, no? Ain't you inspired, nay perspired with confidence, optimism and righteous joy? You aren't? Stop whining and get on with the program..see the rest of the world has moved on....

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Re: Perspectives on the global economic meltdown

Postby Singha » 18 Oct 2009 21:25

some of the militia types/freemen who talk about the 'world jewish conspiracy' may not be too far off the mark. just add in the anglo-saxon elites into the mix. :lol:


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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 19 Oct 2009 17:06

Resident realist Sri Ambrose Evans Pritchard in the UK telegraf.

A sterling crash is a godsend

Britain has twice averted disaster over the past century by a timely – if humiliating – crash in sterling. In neither case was it obvious that this would lead to a decade-long revival in British fortunes.


Sure, its happened in the past. Twice. So it shall happen again tomorrow. Zimble, no?

Today's events have no parallel, though it is worth looking back at Britain's forced retreat from the Gold Standard in September 1931. The event was calamitous. Gold had been the monetary anchor of the imperial era.
...
We are in a worse state today than in 1992 or 1931. Our budget deficit is 13pc of GDP. We are living £175bn a year beyond our means.

Sterling's slide may overshoot so badly this time that it triggers a run on the gilts market. But there are risks whatever we do. My (unpopular) view is that the Bank of England has saved this country from depression by printing money a l'outrance, and inviting markets to sell sterling.

David Cameron should not have questioned the Bank's strategy so lightly. The only way out is to cut spending as Canada did in the early 1990s and to offset the effects by printing as much money as it takes, for as long as it takes. The greatest error would be to repeat the loose fiscal/tight money policies of Japan in the first part of its Lost Decade, a mix that has driven public debt to 215pc of GDP. That way lies ruin.

A crashing currency is not a pretty sight. Yet the iron rule is that once you have debauched your economy, you must let the exchange rate reflect reality. To pretend otherwise is to dig your nation deeper into a hole.


Wise words, those, in the bolded part.

But saar, it won't be that zimble either, see. A currency crash also brings other horsemen with it. Like skyrocketing interest rates in the gilts mkt that will choke the freakin' life out of any attempt at gubmint attempt at feel-good expenditure including but not restricted to the bulk of welfare spend. What AEP doesn't perhaps account for is the fact that unlike in the 30s, UQstan now has forgotten the terrible curse of poverty. And what stares the erstwhile emerged tftas is poverty amongst the most vulnerable tenth of the population - the sick, the elderly, the pensioners, the homeless, the single moms, the welfare moochers such as the average packee and so on. We'll see when union contracts snap all over the place and even gubmint servants are fired for lack of funds. It surely doesn't look pretty indeed. Be careful what you wish for, sri AEP...

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 19 Oct 2009 19:55

Its getting worse. I'm having a bad feeling about this. UQ-stan sinking is one thing. Duniya can live with that.

The khanate going down quite another, IMO. And quite unwelcome too, IMHO.

FDIC chief Sheila Bair admits FDIC in the red till 2012

And with banks going under every single week since fall 2008, bet it will be stressed ever more. In another era, FDR declared a bank holiday.

Testifying before members of the Senate Banking Committee, the nation's top commercial bank regulator stressed that her agency was taking immediate steps to replenish the dwindling fund. But she said those efforts would not put the rescue fund in the black until a little more than two years from now at the earliest.

The fund has come under severe strain in recent months amid the recent surge in bank failures. Ninety-eight banks have failed so far this year, which has reduced the fund's value to $10 billion from $45 billion a year ago.


Meanwhile, Interest on loans rankles college grads

The edu bubble burst ain't far away. And along with underwater mortgages, then sky high defaults on credit card debt, add the coming storm of student loan defaults as well.

Like many recent college grads, Steven Lee finds himself unemployed in one of the roughest job markets in decades and saddled with a big pile of debt. He owes about $84,000 in student loans for undergrad and grad-school costs.

But what Lee's angry about isn't the slings and arrows of an outrageous economy, and it isn't the idea that he owes a ton of money for all the learning he's received. It's the interest rates on his government-backed student loans, which range from 6.8 percent to 8.5 percent.

"The rate for a 30-year mortgage is around 5 percent," Lee said. "Why should anyone have to pay 8.5 percent?"

Well, because a deal's a deal, and that's the rate Lee accepted when he received his loan.

"I disagree," he replied. "The government has bailed out homeowners. It's bailed out big businesses. Why can't it also help students?"


Again, not good at all.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 19 Oct 2009 20:05

OMG....Max kaiser is my hero!

Watch this whole piece...watch the pointed reference to reality as it is...no punches pulled.

(i) "The word is not froth the word is fraud. JPMorgan, Goldman Sachs, Citigroup, are all engaged in accounting fraud. They are not realizing losses on trillions of dollars worth of bad debts on their books, giving themselves big bonuses this year, deferring losses to next year ...."
(ii) The banks are behaving like oosai bummers. Give us bailout money or we'll blow the economy to bits. And shux, these are soosai bum tactics of the bankers only!

...oh irony...poignancy....

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/pFMgwL-Tq4s&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowScriptAccess" value="always"></param><embed src="http://www.youtube.com/v/pFMgwL-Tq4s&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="425" height="344"></embed></object>[/youtube]

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 19 Oct 2009 20:14

"...people are losing their homes, their jobs, their everything. People are dying because of wall street jihadis blowing up the economy..."

Max Kaiser zindabad!

[youtube]<object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/tbAqqLkiUkg&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1"></param><param name="allowFullScreen" value="true"></param><param name="allowScriptAccess" value="always"></param><embed src="http://www.youtube.com/v/tbAqqLkiUkg&color1=0xb1b1b1&color2=0xcfcfcf&hl=en&feature=player_embedded&fs=1" type="application/x-shockwave-flash" allowfullscreen="true" allowScriptAccess="always" width="425" height="344"></embed></object>[/youtube]

Recommended watch, both these vids, janta.

The pitchforks can't be far away. Maybe, just maybe, despite their control of congress and media, the banksters have overplayed their hand. Long shot I know, but history is the story of establishment bets that failed. No?

The outrage is palpable. Something maybe around the corner.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 19 Oct 2009 20:24

Even Harvard couldn't understand wall street derivatives well enough, seems like, and they got burnt pretty bad onlee.

"Harvard University’s failed bet that interest rates would rise cost the world’s richest school at least $500 million in payments to escape derivatives that backfired.

Harvard paid $497.6 million to investment banks during the fiscal year ended June 30 to get out of $1.1 billion of interest-rate swaps…it also agreed to pay $425 million over 30 to 40 years to offset an additional $764 million in swaps.

The annual report provides new details on Harvard’s derivative-related losses. Many were entered into in 2004. Lawrence Summers, director of President Barack Obama’s National Economic Council, was the university’s president at the time. White House spokesman Matthew Vogel declined to comment.

Harvard had 19 swap contracts with New York-based Goldman Sachs; JPMorgan Chase & Co.; Morgan Stanley; Charlotte, North Carolina-based Bank of America Corp. and other large banks, according to a bond-ratings report by Standard & Poor’s released on Jan. 18, 2008.

Harvard paid “a large termination fee, but within the range that we’ve heard about over the last year,” Matt Fabian, the senior analyst and managing director of Municipal Market Advisors in Westport, Connecticut, said in an e-mail. “There is a reason why, regardless of the issuer’s sophistication, there should be limits to their exposure to derivatives and variable rate bonds.”

These products should be banned.


bloomberg link

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Re: Perspectives on the global economic meltdown

Postby markos » 19 Oct 2009 22:03

Hari Seldon wrote:In the healthcare sector, the chokehold of the AMA (amrikhan med assoc) on trained med worker supply allows the profession to extract monopoly rents and raises the floor on all manner of subsequent costs in the system. Fighting the AMA isn't even talked about much less planned for.


AMA's behavior is no different than a union, but very few of the union-bashers will ever criticize organizations like AMA (or US Chamber of commerce). They are there to protect the interest of doctors and maximize their earning. Unless US moves to a mayo clinic model where doctors are paid a fixed salary instead of "pay for service", healthcare costs will continue to escalate. If nurses and pharmacists and other healthcare professionsals can work on a fixed salary, so can the doctors.

There is plenty of healthcare fraud happening in US healthcare from providers(doctors, hospitals you name it). I would like to use a simple example that I recently came across to show how ridiculous the whole system is (which many americans foolishly think is helping to provide the best care in the world).

A friend of mine recently went to an "urgent care facility" for an ankle sprain for his son recently(because it happened around 6 pm when doctors are usually unavailable). His visit lasted barely 20 minutes (not counting the nearly 1 hour wait time) and he received 3 bills - one from doctor, one from facility and another from a radiologist totalling $400+ after insurance adjustments against his $500 deductible (yup, one minor incident consumed his entire deductible for a year). Some of the facility charges were ridiculous - $60 for a splint(which he later found for $20 at wal-mart) and $85 for showing how to use a splint(it took about 2 minutes to show how to attach to the velcro on the other end) that he never needed and a a five minute examination by the doctor charging $70. The radiologist who checked the x-ray a day after he went to the facility also charged $40 (after his son was diagnosed to be okay by the doctor who already read the x-ray, so the charges from the radiologist was totally bogus). To top it all, there was nearly $150 charged for using the "facility". A week later, his son still had some pain, so he tried to contact the "urgent care facility" and they told him that they don't keep any records at the facility and he should take him to an orthopedic specialist, as they couldn't offer any more help!!

Now 3 bills from 3 "providers" means 3 times the paper work for a single incident, as each of these bills come from 3 different provider entities. The whole paprework process took about a month for all the bills to be sent to the insurance and then adjusted according to the contract so that the final bill can be sent to the patient (which may be intentional, otherwise patient/insured may get a heart-attack on top of the ankle sprain :rotfl: ).

All his kid probably needed was $5 ace bandage from corner drugstore and all he wanted to confirm was there was no fracture to the ankle.

Now contrast this with India, where the whole visit would have been billed together on the same day as the incident and processed on the same day with the patient paying about Rs. 400 out of pocket. There is hardly any administrative overhead introduced by insurance.

On the other hand, health insurance companies love (provider)healthcare costs increasing higher than average inflation because that means that their overhead(administration costs, salary etc.) can rise at a faster clip which translates to higher salaries and bonuses, since overhead is typically 20-25%. So if the medical premiums increase at 10%, overhead can increase at that rate too. These insurance companies have the worst bureaucracies that you can imagine. I bet govt organizations like IRS is probably function much better than the claims processing shops at these insurers, not too long ago, 38 states (out of 50) fined the largest insurer, united healthcare for their claims processing practices.

I don't see health insurance companies adding any value as an intermediary. They just add to the cost side of the equation by forcing a myriad of forms and contracts on providers and then there is this constant battle between the provider and third party payor to eek out the maximum money. A single payor system that provides only catastrophic insurance coverage(probably based on income, since $1000 treatment may not mean the same for a teacher and a CEO) is the only way to bring down the costs. If your car insurance doesn't pay for your regular oil change, why should health insurance pay for regular your doctor visits and anti-biotics? That alone will force market competition around pricing and make the pricing more transparent which will bring down the costs. Then no one will dare to charge $150 for a splint when the same can be found for $20 elsewhere.

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Re: Perspectives on the global economic meltdown

Postby Bade » 20 Oct 2009 00:28

as for doctors' salaries, if there is a move to regulate their salaries, the number doctors entering the system will come down sharply. nobody wants to spend a good 15 years after high school working like slave labor and then earn a fixed 200,000 salary.....that inevitably will raise prices and actually made healthcare more inaccessible b/c the wait time will skyrocket for everybody. regulating salaries is a bad idea, one that is sure to fail and bring more chaos into the system.


There are plenty of PhDs who do exactly that and get paid not even half of the $200k that docs make. :oops: Docs may look poor when compared to Wall Street criminals and lawyers, but still make a heck lot more than other equivalently qualified abduls.

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Re: Perspectives on the global economic meltdown

Postby SwamyG » 20 Oct 2009 01:16

If your car insurance doesn't pay for your regular oil change, why should health insurance pay for regular your doctor visits and anti-biotics? That alone will force market competition around pricing and make the pricing more transparent which will bring down the costs.

Quite true to some extent. Some times Walmart fills my prescriptions fro $4.xx, and I don't have to use insurance and use my copay which is definitely more than 4 bucks. My only worry is how are they getting it so cheap and from where?

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Re: Perspectives on the global economic meltdown

Postby Nandu » 20 Oct 2009 01:38

prad wrote:

that might be true, but the end reality is if there is wage control for doctors, their supply will crash....

While I am not in favor of government imposed wage controls on docs, I think a very valid argument can be made that the reverse is the case today. High salaries for specialists and low salaries for general practioner/primary care docs have resulted in an oversupply of specialists and an undersupply of primary care docs.
Last edited by Nandu on 20 Oct 2009 02:20, edited 1 time in total.

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Re: Perspectives on the global economic meltdown

Postby markos » 20 Oct 2009 02:09

as for doctors' salaries, IMVHO, somebody needs to calculate the total money spent on doctors' salaries every year. i have a feeling this figure will be a miniscule portion of the total healthcare costs every year. but even so, the scenario you described is extreme and is just plain looting. how much of that can be blamed on insurance providers, how much on hospitals, and how much on doctors??? there is, as of yet, no authoritative analysis on this subject.

Actually physician spending is the second largest component of healthcare spending in US. It consumes 22% of total healthcare spending, second only to hospital spending according to the following study. Also US has one of the lowest per capita doctor visits which means doctors are charging quite a bit more compared to their counterparts in other countries for the same services. I don't think doctors in other countries are any way less qualified than their american counterparts.

http://digitalcommons.ilr.cornell.edu/c ... _workplace

If you follow a real capitalist approach, efficiency should be measured based on outcomes and outcomes in US is no better than other developed countries. Paying a fixed salary to doctors haven't reduced the quality of care at Mayo clinic, so it shouldn't cause the quality to be lowered elsewhere in the country.

Difference in average life expectancy of an american and a malayalee is around 18 months. US Life expectancy is ranked 42nd according to CIA factbook, even lower than cuba.

There are plenty of PhDs who do exactly that and get paid not even half of the $200k that docs make. :oops: Docs may look poor when compared to Wall Street criminals

If you look at other healthcare professions like pharmacist or physical therapist, I believe they also spend 6-8 years in college these days. But they don't have a strong union with the bargaining ability of AMA, so they end up making less than half the money compared to a doctor, often working longer hours. In other countries like India, doctors make more money by working longer hours,not by jacking up the rates.

Even today, AMA ensures that there is an artificial shortage of MDs in US to make sure that doctors can continue charge an arm and a leg through inflated re-imbursement rates from every payor. If there is a shortage of doctors, increase the enrollment and bring down the cost of medical education as would happen with any other industry.

Some times Walmart fills my prescriptions fro $4.xx, and I don't have to use insurance and use my copay which is definitely more than 4 bucks. My only worry is how are they getting it so cheap and from where

They are generics(drugs off patent), so most of those drugs won't cost that much. There is no transparency around drug pricing in US with many intermediaries like PBMs getting into the middle to get their cut, but adding very little value(The typical drug supply chain is like Drug Manufacturer--> Wholesaler--> Retailer --> PBM ---> Payor--->Insured/Patient).

What US should do is to apply the walmart model of sourcing to healthcare - i.e. cut the useless intermediaries that don't add any value and make the pricing transparent.

Republican thug (congressman) Billy Tauzin drafted a bill to provide medicare prescription drug benefit to seniors after promising the drug companies NOT to negotiate lower drug prices using the clout of medicare (go figure, capitalists. Imagine walmart buying toys from suppliers at an inflated unit price forgoing all volume discounts) . Tauzin then went to work for American Pharmaceutical industry.

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Re: Perspectives on the global economic meltdown

Postby Virupaksha » 20 Oct 2009 02:12

SwamyG wrote:
If your car insurance doesn't pay for your regular oil change, why should health insurance pay for regular your doctor visits and anti-biotics? That alone will force market competition around pricing and make the pricing more transparent which will bring down the costs.

Quite true to some extent. Some times Walmart fills my prescriptions fro $4.xx, and I don't have to use insurance and use my copay which is definitely more than 4 bucks. My only worry is how are they getting it so cheap and from where?

SwamyG,

every one (except the patient ofcourse :lol: ) gets the medicine at more or less the same rate.

I can give you a personal example. My friend got his hand fractured. We went the doctor. The doctor flatly said, if you pay yourselves, it will be $75 as consultation fee, but $200 if you use insurance. Next time, ask the non-chain pharmacists :wink: for a non-insurance quote of the medicine and you will start understanding the scam this scamsurance is in massa land.

My last personal visit to a doctor(not in any way a person we know) in hyderabad,India was 2 years and he charged Rs. 20 per visit and gave me some medicines for free. Of course, he was seeing more than 5 patients at the same time :twisted: He was a doctor in a big govt hospital since the time I know that clinic existed, which is 7 years.

Virupaksha
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Re: Perspectives on the global economic meltdown

Postby Virupaksha » 20 Oct 2009 02:15

markos wrote:If you look at other healthcare professions like pharmacist or physical therapist, I believe they also spend 6-8 years in college these days. But they don't have a strong union with the bargaining ability of AMA, so they end up making less than half the money compared to a doctor, often working longer hours. In other countries like India, doctors make more money by working longer hours,not by jacking up the rates.

Markos,

You would be surprised as to how much a pharmacist (one who owns a pharmacy makes). My room mate worked in a pharmacy and the stories about the margins they make are juicy :oops:

markos
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Re: Perspectives on the global economic meltdown

Postby markos » 20 Oct 2009 02:20

igh salaries for specialists and low salaries for general practioner/primary care docs have resulted in an oversupply of specialists and an undersupply of primary care docs.

I recently went to a doctor who was listed as a specialist as well as an internist. I went for a routine checkup and then I had to pay the specialist co-pay. So I called the insurance (since routine checkup was supposed to be free), I came to know that he billed as a specialist and wrote some diagnosis on the claim(though I went for preventive visit). His office wouldn't correct the claim, but they waived my copay. I am guessing they made enough from the insurance.

As much as we may blame the bankers for their flaws, if health insurance companies were processing mortgages, it would have cost 1 year to close a loan and 20% of the principal as closing costs. :rotfl: A check you deposit in the bank clears in 2 days,what is the average days payable for an insurance claim?

markos
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Re: Perspectives on the global economic meltdown

Postby markos » 20 Oct 2009 02:45

it will be $75 as consultation fee, but $200 if you use insurance

Ravi,
Doctor may bill the insurance at $200, but what he didn't tell you was probably he will get reimbursed only $75 from insurance (providers keep their rates artificially high to compensate for the negotiated insurance discounts which could vary across payor. Insurance may pay only 40-60% of the providers rate anyway. You may pay two different rates to the same provider for the same type of visit from two different insurance companies, again to the point of lack of transparency around pricing). So he would rather take the $75 from you since there is no overhead of paper-work and waiting for the reimbursement.

Drugs have so much profit built in because of the intermediaries in the supply chain. Cut them out and prices should come down.

Here is an example of how the drug supply chain is manipulating prices. Even after an anti-trust ruling recently, the consumers are unlikely to see any benefits

http://www.reuters.com/article/pressRel ... RN20090812
In fact, PBMs are aggressively renegotiating their contracts and offering
internally derived solutions to this pricing dilemma, but none have stated
that there will be savings to the payors resulting from a roll-back in drug
costs
. "Many PBMs are moving quickly on the client side, but have offered
little detail to their clients regarding whether the PBM's network is really
mandating the reduction in discounts. We understand PBMs are the pricing
middlemen between payors and pharmacies, but have all the 45,000+ pharmacies
nationwide come back to the PBMs and renegotiated new agreements with lower
discounts? If not, a PBM is actually benefiting immensely by these actions,
by lowering discounts to clients but not to pharmacies," says Rucinski


As I stated earlier, pricing transparency and removal of intermediaries is what is needed as the first step for US Healthcare reform. Any reform without those elements will just be another deformity added to the "medical-industrial complex".

SwamyG
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Re: Perspectives on the global economic meltdown

Postby SwamyG » 20 Oct 2009 03:23

If you look at other healthcare professions like pharmacist or physical therapist, I believe they also spend 6-8 years in college these days. But they don't have a strong union with the bargaining ability of AMA, so they end up making less than half the money compared to a doctor, often working longer hours. In other countries like India, doctors make more money by working longer hours,not by jacking up the rates.

My primary doctor was an actual doctor; the doctor left the clinic. Now I am seen by a PA. Same service. I guess for a majority of the cases it does not matter if it is a PA or Physician - either way I am instructed or have the option to see a specialist.

Ahem ahem folks, we are talking about health care in USA ...... this is global economic meltdown thread. We need to wrap this up pretty quickly before some moderator flies by and reminds us.

AkshayM
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Re: Perspectives on the global economic meltdown

Postby AkshayM » 20 Oct 2009 03:23

Ok, someone had to say it, so I'll say it :twisted:

Get back to topic of the thread.

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Re: Perspectives on the global economic meltdown

Postby putnanja » 20 Oct 2009 05:02

ravi_ku wrote:I can give you a personal example. My friend got his hand fractured. We went the doctor. The doctor flatly said, if you pay yourselves, it will be $75 as consultation fee, but $200 if you use insurance. Next time, ask the non-chain pharmacists :wink: for a non-insurance quote of the medicine and you will start understanding the scam this scamsurance is in massa land.



I had the opposite experience. I once took a visiting relative to a doctor for an infection and was billed $175 ( no insurance, as it was within deductible). I called up the doctor's office and was basically told that they have negotiated rates with the insurance companies, and since I was paying cash, I have to pay the full amount. They flatly refused to bring down the rate.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 20 Oct 2009 05:49

Matt Taibbi on a roll again - he of the 'GS==vampire squid' fame.

Wall street's naked swindle

Compelling read folks. Investigative journalism is this. The type that the fin press was supposed to be doing only. Left to rolling stone to do now since all other media are bought and paid for.

Opening para-
On Tuesday, March 11th, 2008, somebody — nobody knows who — made one of the craziest bets Wall Street has ever seen. The mystery figure spent $1.7 million on a series of options, gambling that shares in the venerable investment bank Bear Stearns would lose more than half their value in nine days or less. It was madness — "like buying 1.7 million lottery tickets," according to one financial analyst.

But what's even crazier is that the bet paid.

At the close of business that afternoon, Bear Stearns was trading at $62.97. At that point, whoever made the gamble owned the right to sell huge bundles of Bear stock, at $30 and $25, on or before March 20th. In order for the bet to pay, Bear would have to fall harder and faster than any Wall Street brokerage in history.

The very next day, March 12th, Bear went into free fall. By the end of the week, the firm had lost virtually all of its cash and was clinging to promises of state aid; by the weekend, it was being knocked to its knees by the Fed and the Treasury, and forced at the barrel of a shotgun to sell itself to JPMorgan Chase (which had been given $29 billion in public money to marry its hunchbacked new bride) at the humiliating price of … $2 a share. Whoever bought those options on March 11th woke up on the morning of March 17th having made 159 times his money, or roughly $270 million. This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…


Read it all, janta! The more i learn the more stunned i am....

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Re: Perspectives on the global economic meltdown

Postby James B » 20 Oct 2009 13:01

The Banks Are Not All Right

By PAUL KRUGMAN
It was the best of times, it was the worst of times. O.K., maybe not literally the worst, but definitely bad. And the contrast between the immense good fortune of a few and the continuing suffering of all too many boded ill for the future.

I’m talking, of course, about the state of the banks.

The lucky few garnered most of the headlines, as many reacted with fury to the spectacle of Goldman Sachs making record profits and paying huge bonuses even as the rest of America, the victim of a slump made on Wall Street, continues to bleed jobs.

But it’s not a simple case of flourishing banks versus ailing workers: banks that are actually in the business of lending, as opposed to trading, are still in trouble. Most notably, Citigroup and Bank of America, which silenced talk of nationalization earlier this year by claiming that they had returned to profitability, are now — you guessed it — back to reporting losses.

Ask the people at Goldman, and they’ll tell you that it’s nobody’s business but their own how much they earn. But as one critic recently put it: “There is no financial institution that exists today that is not the direct or indirect beneficiary of trillions of dollars of taxpayer support for the financial system.” Indeed: Goldman has made a lot of money in its trading operations, but it was only able to stay in that game thanks to policies that put vast amounts of public money at risk, from the bailout of A.I.G. to the guarantees extended to many of Goldman’s bonds.

So who was this thundering bank critic? None other than Lawrence Summers, the Obama administration’s chief economist — and one of the architects of the administration’s bank policy, which up until now has been to go easy on financial institutions and hope that they mend themselves.

Why the change in tone? Administration officials are furious at the way the financial industry, just months after receiving a gigantic taxpayer bailout, is lobbying fiercely against serious reform. But you have to wonder what they expected to happen. They followed a softly, softly policy, providing aid with few strings, back when all of Wall Street was on the ropes; this left them with very little leverage over firms like Goldman that are now, once again, making a lot of money.

But there’s an even bigger problem: while the wheeler-dealer side of the financial industry, a k a trading operations, is highly profitable again, the part of banking that really matters — lending, which fuels investment and job creation — is not. Key banks remain financially weak, and their weakness is hurting the economy as a whole.

You may recall that earlier this year there was a big debate about how to get the banks lending again. Some analysts, myself included, argued that at least some major banks needed a large injection of capital from taxpayers, and that the only way to do this was to temporarily nationalize the most troubled banks. The debate faded out, however, after Citigroup and Bank of America, the banking system’s weakest links, announced surprise profits. All was well, we were told, now that the banks were profitable again.

But a funny thing happened on the way back to a sound banking system: last week both Citi and BofA announced losses in the third quarter. What happened?
Part of the answer is that those earlier profits were in part a figment of the accountants’ imaginations. More broadly, however, we’re looking at payback from the real economy. In the first phase of the crisis, Main Street was punished for Wall Street’s misdeeds; now broad economic distress, especially persistent high unemployment, is leading to big losses on mortgage loans and credit cards.

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Re: Perspectives on the global economic meltdown

Postby vina » 20 Oct 2009 13:30

This trader was either the luckiest guy in the world, the smartest son of a bitch ever or…


Bear Stearns was easy. I had called a collapse of atleast one major bank and had named Bear Stearns (the smallest , specialized in Fixed Income and Mortagages and hence most vulnerable) right here at BR, atleast 2 days BEFORE it went under.

Ramana I think posted the first news of Bear Stearns collapsed and quoted my earlier post on that. Lehman was a far tougher call, the threat was that the Fed would bail it out. But even in Lehman's case there was a long running short selling hedge fund who had challenged Lehman some 6 months or so before it's fall (including in public meetings with Dick Fuld) and he was ultimately proven right. He must have collected a huge windfall (forget that hedge fund and the guys name), he deserves it of course. I wouldn't grudge them that.

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Re: Perspectives on the global economic meltdown

Postby Rahul Mehta » 20 Oct 2009 14:40

Bade wrote:
as for doctors' salaries, if there is a move to regulate their salaries, the number doctors entering the system will come down sharply. nobody wants to spend a good 15 years after high school working like slave labor and then earn a fixed 200,000 salary.....that inevitably will raise prices and actually made healthcare more inaccessible b/c the wait time will skyrocket for everybody. regulating salaries is a bad idea, one that is sure to fail and bring more chaos into the system.


There are plenty of PhDs who do exactly that and get paid not even half of the $200k that docs make. :oops: Docs may look poor when compared to Wall Street criminals and lawyers, but still make a heck lot more than other equivalently qualified abduls.


Doctors work much harder than PhDs.

IMO, most PhDs are useless. In fact, IMO, all PhDs in humanties, arts are useless. And IMO, only a few say 20% PhDs in science, engineering are useful. While doctors do real work and save real human lives. Doctors are GOD, no sarcasm, no kidding.

So lets not compare PhDs with Doctors.

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Re: Perspectives on the global economic meltdown

Postby Tanaji » 20 Oct 2009 16:19

Doctors work much harder than PhDs.

IMO, most PhDs are useless. In fact, IMO, all PhDs in humanties, arts are useless. And IMO, only a few say 20% PhDs in science, engineering are useful. While doctors do real work and save real human lives. Doctors are GOD, no sarcasm, no kidding.

So lets not compare PhDs with Doctors.


This post deserves some sort of an award. Quoting it so that it remains preserved for posterity for the profound light that it sheds.

Neshant
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Re: Perspectives on the global economic meltdown

Postby Neshant » 20 Oct 2009 16:27

Fantastic interview with William Black about the present crisis and how it compares to the S&L
crisis of the 80s. He's the one who blew the lid on the S&L crisis.

http://www.democracynow.org/2009/10/15/black

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Re: Perspectives on the global economic meltdown

Postby Yugandhar » 20 Oct 2009 17:17

Doctors work much harder than PhDs.

IMO, most PhDs are useless. In fact, IMO, all PhDs in humanties, arts are useless. And IMO, only a few say 20% PhDs in science, engineering are useful. While doctors do real work and save real human lives. Doctors are GOD, no sarcasm, no kidding.

So lets not compare PhDs with Doctors.


Rahul Mehta if you did care to browse through some science textbooks/journals you will find that a lot of what the the doctors (aka GOD) use to cure their patients is the hard work of the PhD cadre. A good look at the history of antibiotics will do to enlighten.you can check the work of this years Nobel lauerates Venki Ramakrishnan and Ada Yonath. their work has a direct impact on next generation drugs to cure bacterial diseases.
The 20% of good/great science stands on a pyramid of 80% not so great science. so dont diss the others.
its good to remember what Newton said "If I have seen further it is only by standing on the shoulders of giants". Every little discovery helps.

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Re: Perspectives on the global economic meltdown

Postby ramana » 21 Oct 2009 01:30

prad, The Indian American doctors association, AAPI says that physicians and other providers are 19% of the total healthcare picture. Hospitals claim to be 30%. I dont know the rest.

Vina on this very forum called the Bear Stearns and Lehmans collapse. I knew someone who was IT mgr at B-S and who suffered a little bit but life goes on.

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Re: Perspectives on the global economic meltdown

Postby Hari Seldon » 21 Oct 2009 16:52

Yves Smith puts forth the idea that the quaint notion that rebuilding regulatory structures under new leadership, undoing regulatory and legislative damage of the past decade, can, at least in theory, return the khanate and the wider global ekhanomy to the old days, is quite unrealistic.

Too Big To Fail maybe here to stay

Paul Volcker wants to roll the clock back and restore Glass Steagall, the 1933 rule that separated commercial banking from investment banking, but Team Obama is politely ignoring him.
...
I think Volcker is wrong, but not for reasons one might expect.
...
The problem is that we have had a thirty year growth in securitization. A lot of activities that were once done strictly on bank balance sheets are merely originated by banks and are sold into capital markets. Think of the old model as mainframes and the new model as distributed computing.

We have now seen a lot of activity shift from banks to capital markets. And thanks to a host of factors (barriers to entry like high minimum scale, network effects, deregulation which made it easier for firms to span product and geographic markets) we now have capital markets dominated by a very small number of players. And these players are too big to fail by virtue of their ROLE, not simply their size. Lehman was considered small enough to be let go, but it was sufficiently tied to the grid so as to produce a more disruptive outcome than the authorities assumed (I am not of the view that Lehman was let go by design in a financial version of a Reichstag fire.)
...
Now you could in theory go back to having much more on balance sheet intermediation (finance speak for “dial the clock back 35 years and have banks keep pretty much all their loans”). Conceptually, that is a tidy solution, but it has a massive flaw: it would take a simply enormous amount of equity to provide enough equity to all those banks with their vastly bigger balance sheets. We’re having enough trouble recapitalizing the banking system we have.
...
So the industry had already become so concentrated (and levered) that it had become more failure prone. So merely separating commercial banking and investment banking is not sufficient; you have to do something about the risk taking of capital market players. And sadly, the network effects in trading are powerful. Left to their own devices, the propensity is for the industry to coalesce into a format of fewer, more powerful players. And now that it is in that format, it would take a lot of intervention (Tobin taxes? barriers between products? barriers between geographies?) to not merely restructure the industry, but to keep the factors that favor concentration from reasserting themselves.
...
And the elephant in the room is derivatives. The big players have massive OTC derivatives exposures. You need a really big balance sheet to provide OTC derivatives cost effectively (recall that this is one area where the big banks were competitive players early on, and it was because derivatives “talent” would put up with nuisances of being at a commercial bank because the advantage of having a very large balance sheet was an enormous advantage). And the books are large, and most exposures are hedged dynamically.

So even if miraculously, the powers that be around the world agreed on a way to reconfigure things to make it less attractive to have a small number of integrated capital markets firm…..what are you going to do about their big derivatives books? Even if you could figure out a way to break up a business going forward, you have massive exposures, and smaller balance sheets in the new entities (and that’s before we get to possible operational and skill issues….).

Put it simply, I have yet to see anything even remotely approaching a realistic discussion of how to deal with too big too fail firms, and we have been at this for months. My knowledge of the industry is not fully current, but even so, the difficulties are far greater than I have seen acknowledged anywhere. That pretty much guarantees none of the proposals are serious, and nothing will be done on this front.

That further implies the system will have to break down catastrophically before anything effective can be done. I really hope I am wrong on this one.

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Re: Perspectives on the global economic meltdown

Postby svinayak » 21 Oct 2009 21:20

THE GANGSTER CAPITALISM!

The secret meeting of Paulson and Goldman in Moscow prior to Sept 2008!

YOU CANNOT EVEN MAKE THIS UP!!!

http://blogs.reuters.com/felix-salmon/2 ... n-meeting/



Death of 'Soul of Capitalism:" Bogle, Faber, Moore - Paul Farrell at Marketwatch.com
20 reasons America has lost its soul and collapse is inevitable

http://www.marketwatch.com/story/americ ... 2009-10-20



Pray for AMERICA, land of the SHEEP and home of the SHAFTED!!

svinayak
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Re: Perspectives on the global economic meltdown

Postby svinayak » 21 Oct 2009 22:04

Check out how currency played a big part before the WWII
http://www.realityreviewed.com/Adolf_01.htm

In this quote we see Schacht echoing the textbook lie that Weimar inflation was caused when the German government printed its own money. However, in his 1967 book The Magic of Money, Schacht let the cat out of the bag by revealing that it was the PRIVATELY-OWNED Reich bank, not the German government, that was pumping new currency into the economy. Thus, the PRIVATE BANK caused the Weimar hyper-inflation.

What drove the post-WWI inflation into hyper-inflation was speculation by foreign investors, who sold the mark short, betting on its decreasing value. Speculation in the German mark was made possible because the PRIVATELY OWNED Reich bank (not yet under Nazi control) made massive amounts of currency available for borrowing. This currency, like U.S. currency today, was created with accounting entries on the bank's ledgers. Then the funny-money was lent at compound interest. When the Reich bank could not keep up with the voracious demand for marks, other private banks were allowed to create marks out of nothing, and to lend them with usury. The result was runaway debt and inflation.

Thus, according to Schacht himself, the German government did not cause the Weimar hyper-inflation. On the contrary, the government (under the National Socialists) eliminated hyper-inflation.

The National Socialists put the Reich bank under strict government regulation, and took prompt corrective measures to eliminate foreign speculation. One of those measures was to eliminate easy access to funny-money loans from private banks. Then His Excellency, Chancellor Adolf Hitler got Germany back on its feet by having the public government issue Treasury Certificates.

Schacht, the Rothschild agent, disapproved of this government fiat money, and wound up getting fired as head of the Reich bank when he refused to issue it. Nonetheless, he acknowledged in his later memoirs that allowing the government to issue the money it needed did not produce the price inflation predicted by classical economic "theory," which says that currency must be borrowed from private cartels.

What causes hyper-inflation is uncontrolled speculation. When speculation is coupled with debt (owed to private banking cartels) the result is disaster. On the other hand, when a government issues currency in carefully measured ways, it causes supply and demand to increase together, leaving prices unaffected. Hence there is no inflation, no debt, no unemployment, and no need for income taxes.

Naturally this terrifies the bankers, since it eliminates their powers. It also terrifies the Zionists, firstly because it prevents wars from starting, and secondly because their control of banking allows them to buy the media, the government, and everything else.

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Re: Perspectives on the global economic meltdown

Postby AkshayM » 22 Oct 2009 03:43

Re: Bear Stearns

I'm reading a book recollecting the March free fall of BS and in the back of my mind I kept thinking Goldman. It is entirely possible that hedge funds led a three pronged attack that immensely added fuel to the fire and took up a notch all the virulent rumors about Bear Stearns liquidity. What hedge funds probably did was to pull their money out of BS, short BS and buy CDS betting against BS. There was another big European bank that refused to be counter-party to BS in overnight financing market. It is not clear which bank it was.

There is also incident where GS declined to replace original client with themselves in CDS trades. Apparently that signals "I don't want to do business with you". However, next day GS did become the counter-party on those positions. The GS explanation to that is to in theory to quell the fear and rumors about doing business with a given firm by forcing clients to work with the firm itself.

I'm speechless at the fact that most Wall Street investment banks runs on overnight financing from repurchasing agreements, money market funds etc. I mean it is day to day. If credit dries, you die. As witnessed in case of BS and Lehman all it takes is trickle of no-confidence and rumor to rip through the vaunted masters of the universe.

Regardless, I think it was too little too late and everything and the kitchen sink had bolted.

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Re: Perspectives on the global economic meltdown

Postby Neshant » 22 Oct 2009 06:08

Although I'm not one to listen to financial gurus, I am following the predictions of Robert Prechter, author of the book back in 2002 called Conquer the Crash.

His predictions in 2007 shortly before the crash and even after the crash in 2008/9 which you can check out on youtube were spot on about the collapse and the subsequent rally since march. He claims it will be the last rally before the Big crash.

While most gurus are telling people to flee dollars while they can, he's telling people to invest in the safest dollar denominated assets (short term treasury bills). Among some of his more interesting claims :

- real estate will decline by 90% from its peak in 2006/7 !
- USD will rise in value as debt will collapse faster than it can be inflated away
- only people with cash/cash equivalent will be in a position to buy assets at bargain prices when this second crash occurs. Loans/credit will be impossible to get.
- gold along with all commodities will decline not rise in value during this second crash.
- some time after this second crash, things will move from deflation to hyper-inflation as beaurocrats move to 'fix' the situation with the printing press.
- stocks are presently greatly over-valued compared to a jar of pickels on a historical basis
- dividend payouts on stocks are extremely low, a key indicator of this over-valuation.

All kinds of interesting info. His updated book is coming out at the end of this month and I'll be reading it. :

http://www.elliottwave.com/conquerthecrash/


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