Perspectives on the global economic meltdown

Abhijeet
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Re: Perspectives on the global economic meltdown

Postby Abhijeet » 20 Feb 2009 03:11

Singha wrote:Cindy Dreeszen and her husband live in one of the wealthiest counties in the United States. They have steady jobs, his at a movie theater and hers at a government office. Together, they earn about $55,000 a year.


Not to make light of their situation, which is sad, but this opening line is revealing. How can a couple earning $55K combined afford to live in "one of the wealthiest counties in the United States"? Seems like a textbook case of living beyond their means.

Singha
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Re: Perspectives on the global economic meltdown

Postby Singha » 20 Feb 2009 10:39

school zone ghettoization. one way to break that is mandate from state level that schools must all be funded equally by drawing up local $ into a pool then fanned down on equal-equal basis from lexington down to dorchester.

the rich need to be grounded and feel the heat of the masses. nothing like rich
soft brats rubbing shoulders with a few ghetto dawgs toting smith & wessons
to keep them 'grounded'

and this will keep property prices from escalating wildly in good school distts
because in due course, all school will be equal :twisted:

that was the whole idea of public schools before the upper middle class goras
subverted it. the truly rich ofcourse are in private schools like philips academy
or groton school.

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Re: Perspectives on the global economic meltdown

Postby amol.p » 20 Feb 2009 11:09

FAULT LINES AMONG EU MEMBERS STARTS ARISING

Czech president attacks EU politics

Klaus, known for his euroscepticism, drew comparisons between supporters of greater EU integration and communists during the Soviet era.

The president said he rejected the "uncriticisable assumption that there is only one possible and correct future of ... deeper and deeper integration".

"Not so long ago in our part of Europe we lived in a political system that allowed no alternative and therefore no parliamentary opposition," Klaus said, referring to the
communist regimes that fell two decades ago.

"We learned the bitter lesson that with no opposition, there is no freedom," he said.


"Here (in the European Parliament) there is only one single alternative, and those who dare think about a different option are labelled as enemies of European integration," Klaus said.



http://english.aljazeera.net/news/europ ... 70379.html

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Re: Perspectives on the global economic meltdown

Postby amol.p » 20 Feb 2009 11:11

France sends forces to Guadeloupe

France has sent hundreds of police reinforcements to the French-Caribbean island of Guadeloupe, as month-long strikes over declining economic conditions have spilled over into violence
Three policemen were targeted by gunmen while attempting to reach Bino and secure the area, Hubert Vernet, a government official, told the Reuters news agency.
"Unemployment here is the third highest in the European Union. Away from the luxury hotels and resorts there is a severe economic situation that has angered a lot of people."

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Re: Perspectives on the global economic meltdown

Postby amol.p » 20 Feb 2009 11:19

Auto bailout tab could top $130 billion

At $130 billion one could buy entire american & european auto companies at current valuations...!!!!!!!!!!!

http://truthalliance.net/Archive/tabid/ ... llion.aspx

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Re: Perspectives on the global economic meltdown

Postby svinayak » 20 Feb 2009 11:48

According to Bloomberg, GM has “asked the U.S. for as much as $16.6 billion in new loans” so that it can survive while it cuts as many as 47,000 jobs worldwide.

Meanwhile, Chrysler, which is planning to cut an additional 3,000 jobs, wants another $5 billion in financing from taxpayers.

And why would this be a good deal for the taxpayers? According to plans submitted to the government by the the two automakers, bankruptcy for the companies could cost the U.S. as much as $110 billion.

In other words, according to the automakers, the $21 billion in new financing they seek is a good deal compared to the alternative.

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Re: Perspectives on the global economic meltdown

Postby Singha » 20 Feb 2009 12:44

I feel ford, GM and chrysler are dead as consumer car cos. they could focus on
the military or specialized market like pratt & whitney, caterpillar or oshkosh.

no idea where their huge R&D budgets in the past were spent on , probably
making harley earl concept cars, dodge vipers, dodge tomahawk concept bikes and executive/sales retreats to bellagio in las vegas to smoke cigars and feel up the ladies.

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Re: Perspectives on the global economic meltdown

Postby Arya Sumantra » 20 Feb 2009 14:31

Japan turns to 'work-sharing' to avoid layoffs

EXCERPTS
Common in parts of Europe, work-sharing means slashing employees' pay and hours instead of firing people outright. Two or three people might share what previously was one person's job.

The idea is that employees are required to share the pain of coping with hard times while everyone gets to keep their jobs -- even if they're paid less.

Work-sharing is the latest buzzword in Japan Inc. Proponents say it's a good way to avoid American-style layoffs in a society that has long fostered lifetime employment. Toyota Motor Corp., Mazda Motor Corp., Toshiba Corp. and Fujitsu Inc., have all taken up some kind of work-sharing. Nissan Motor Co. and others are considering it.

A handful of Japanese companies experimented with work-sharing during a slowdown a decade ago, but this time more are adopting the practice than ever before as a way to survive the far more serious recession.

Work-sharing is catching on here for cultural, legal and practical reasons.

Many Japanese companies maintain the tradition of lifetime employment so work-sharing is a way to avoid firing regular workers.

At the same time, work-sharing allows companies to keep trained workers -- and bring them back up to full-time quickly, once a recovery comes.

Work-sharing is routine in nations such as Germany and Switzerland, where the government provides unemployment benefits to make up for the income fall from lost hours, said Jenny Hunt, economics professor at McGill University in Montreal, Canada.

She said the practice is unlikely to be popular in the U.S., where companies prefer to "concentrate the misery in a few people," and simply reduce workers.

"The income loss is spread over more people, and fewer people suffer the depression associated with unemployment," Hunt said. "The economic advantage is that firms retain their workers who are experienced on the job."

Work-sharing has created some problems, says Sadao Nagakura, an executive at ASKK, the precision equipment maker.

Accustomed to working long hours, some employees found that cutting back undermined their morale :eek: . Another obstacle was that wives of male employees complained that they didn't want their spouses at home :rotfl: , he said.


Productivity and Efficiency hawks are going to hate this. But then there is Japanese-German model and US model for industry.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 20 Feb 2009 21:38

US claims 52,000 hid UBS accounts

As many as 52,000 American customers hid UBS accounts from the authorities in violation of tax laws, a US government lawsuit against the Swiss bank alleged on Thursday.

The Department of Justice filed a suit seeking to force UBS to disclose the holders of accounts with about $14.8bn in assets.


Great. Falling economy -> Falling tax revenues exactly when expense burdens soar for govts. No wonder teh temptation and willingness to track evaded monies soars as well.

I hope the US doesn't give up that easily. But there are way far too many pressures involved in keeping swiss accounts secret the world over.

Anyways, good to know that the first success has already happened.

The swiss will claim that trials against UBS can only be brought up in swiss courts and we know how they will rule. But UBS' wrongs were committed in the US. US courts ought to have jurisdiction.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 20 Feb 2009 21:52

Crop Scientists Say Biotechnology Seed Companies Are Thwarting Research

Whuddathunkit....

there's a reason why EU and USA persist in giving large agro subsidies. Food sufficiency is the #1 priority for self reliance, IMO, with due apologies to Adam Smith and David Ricardo.

TSP will give in when it becomes unable to feed itself. We here desperately need our second green revolution.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 20 Feb 2009 22:03

Chinese copper entrepreneurs flee DR Congo

More than 40 Chinese-run copper smelters are standing idle in the Democratic Republic of Congo after their owners fled the country without paying taxes or compensating staff at the end of the commodity boom, according to a governor.


Terrible.... I'm talking about the shady plot to besmirch the image of China's heroic entrepreneurs.....

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Re: Perspectives on the global economic meltdown

Postby Singha » 21 Feb 2009 08:06

this chart says it all.
http://www.nytimes.com/imagepages/2009/ ... APHIC.html

Foreigners Wary of Long-Term U.S. Securities

By FLOYD NORRIS
Published: February 20, 2009

JUST when the United States really, really needs the money, overseas investors seem to be less willing to buy long-term American securities.

The government said this week that net purchases of those securities fell to $412.5 billion in 2008, less than half the 2007 level and the lowest annual total since 1999, when the federal government was running a budget surplus.

Money did come in, but it was diverted into the safest investment around, albeit one with almost no expectation of profit, Treasury bills. Overseas investors increased their holdings of those securities by $456 billion, an unprecedented flow.

A good part of that cash may have come from investors who would otherwise have invested in bonds issued by Fannie Mae and Freddie Mac, the government-sponsored mortgage lending enterprises.

For many years, those securities, which carried an implicit — that is, not certain — government guarantee, were popular overseas because they yielded more than Treasury bonds but seemed to have little additional risk.

But foreigners began selling them as the financial crisis accelerated last summer, and continued doing so even after the government rescued Fannie and Freddie and issued an explicit guarantee of their debts. Over all, foreigners sold $37.8 billion of agency securities. It was the first year since 1983, when the agency market was much smaller, that foreigners were net sellers.

The aversion to risk also showed up in the choice of long-term securities that were purchased. Foreigners bought a net $316 billion in Treasury notes and bonds, the most in three years. But purchases of corporate bonds and stocks plunged.

It has long been a cliché that foreign investors in any market lack local knowledge and get the timing wrong. The data bears that out this year. The largest annual flow into American stocks ever was in 2007, when $195.5 billion came in. That broke the previous record of $174.9 billion, set in 2000. Stock prices fell sharply after each of those years.

The decline in funds for corporate bonds was not entirely attributable to a new hesitation to lend money to companies. The government counted other securities — like private mortgage-backed securities — as corporate bonds, and those markets have basically dried up. In any case, foreign purchases of corporate bonds fell to under $100 billion in 2008, less than a fifth of the level two years before.

Official institutions — foreign governments and central banks — have largely stopped investing in long-term American securities, a fact that may reflect their need for funds at home as the global recession deepens. Those institutions were net sellers in every month from July through December, an unprecedented stretch.

The fact that so much of the money came into Treasury bills — which mature within a year — means that the owners can get their money back whenever they wish, and will get it soon if they simply do nothing. It is thus readily available to move rapidly.

When the fear that drove money into Treasury bills fades, it may become clearer whether the rest of the world still sees the United States as a good place for long-term investments.

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Re: Perspectives on the global economic meltdown

Postby svinayak » 21 Feb 2009 08:30

Credit crunch may only have just begun, S&P warns
By Alistair Barr, MarketWatch
Last update: 5:18 p.m. EST Feb. 20, 2009


SAN FRANCISCO (MarketWatch) -- The credit crunch may only be in its early stages and a bigger contraction in lending in coming months could have "serious implications" for the U.S. economy, Standard & Poor's Rating Services said Friday.
While politicians and others have complained that banks aren't lending, the data on credit outstanding credit in the U.S. only tenuously supports this idea, the rating agency said. See related story.
"What's behind the apparent difference between perception and reality?" Standard & Poor's credit analyst Tanya Azarchs said. "It may be that, while growth in overall credit was positive through at least third-quarter 2008, it has risen at a slower pace than at any time since 1945 -- far below the 8%-10% rate in most years."

Banks are replacing loans as they mature, but there's little net new loan growth, she noted.
"That could mean that the slowdown in lending is just an opening act, and a true credit crunch may yet take the stage," Azarchs warned.

Banks are making fewer and fewer commitments to lend, and new issues of bonds and securitized assets have slowed to a trickle, the analyst said.
"This portends a contraction in total credit available in the coming months," she wrote. "Since this lack of lending may have serious implications for the economy, the U.S. government has been devising policies that would encourage banks to lend."


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Re: Perspectives on the global economic meltdown

Postby shyam » 21 Feb 2009 12:14

Singha wrote:this chart says it all.
http://www.nytimes.com/imagepages/2009/ ... APHIC.html
...
It has long been a cliché that foreign investors in any market lack local knowledge and get the timing wrong. The data bears that out this year. The largest annual flow into American stocks ever was in 2007, when $195.5 billion came in. That broke the previous record of $174.9 billion, set in 2000. Stock prices fell sharply after each of those years.

This way uncle sam gets back the wealth accumulated by foreigners, without having to give it back.

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Re: Perspectives on the global economic meltdown

Postby svinayak » 21 Feb 2009 12:32

Soros sees no bottom for world financial "collapse"

NEW YORK (Reuters) – Renowned investor George Soros said on Friday the world financial system has effectively disintegrated, adding that there is yet no prospect of a near-term resolution to the crisis.

Soros said the turbulence is actually more severe than during the Great Depression, comparing the current situation to the demise of the Soviet Union.

He said the bankruptcy of Lehman Brothers in September marked a turning point in the functioning of the market system.

"We witnessed the collapse of the financial system," Soros said at a Columbia University dinner. "It was placed on life support, and it's still on life support. There's no sign that we are anywhere near a bottom."

His comments echoed those made earlier at the same conference by Paul Volcker, a former Federal Reserve chairman who is now a top adviser to President Barack Obama.

Volcker said industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker said.

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Re: Perspectives on the global economic meltdown

Postby Singha » 21 Feb 2009 16:48

NYT
Career Options for Ex-Wall Street Workers

By MICHAEL WILSON
Published: February 20, 2009

This week’s news that the city plans to spend $45 million to retrain jobless Wall Street executives may, understandably, have been met with less than sobs of gratitude in that demographic. After all, as the happily divorced like to say, stick a fork in a toaster once, it’s an accident. But a second time?


Ross Baltic, a managing partner with Mercury Partners, a headhunter in Midtown, said the simplest transition might be the most straightforward: Analysts for investment banks might leap to the industries they analyzed, traders might move to the companies they bought and sold. “They may know the pharmaceutical industry, they may know aerospace and defense,” he said. “You may have skill sets and be able to transfer those to those sectors.”

But while Mr. Baltic said laid-off Wall Street workers had been calling “like you couldn’t imagine,” he acknowledged that executive headhunters were often of little help these days.

“We’re long on candidates and short on jobs,” he said.

While many of the tens of thousands of masters of the unemployed universe would most likely happily return to doing what they know, others may be looking for a change of pace. Here then, some possibilities for recycling a Wall Street résumé:

Lead walking tours amid the ruins of your past life. Who better to show people around the financial district than someone who has worked — who has bled — on the very spot?

Maybe, said Seth Kamil, founder of Big Onion Walking Tours. But Big Onion tour guides must have advanced degrees in history.

“We’ve actually gotten a couple of résumés from no-longer-employed Wall Streeters,” Mr. Kamil said. “I’ve been kind of graciously trying to say, ‘Working on the street just doesn’t do it.’ ”

Become a butler. “Somebody coming from the Wall Street arena typically would have management background,” said Keith Greenhouse, president of the Pavillion Agency, which trains and places household employees, including chefs, personal assistants, nannies and butlers. “It could tie in, indeed, to personal service.”

It can be a handsome living. “Butlers are starting at around $70,000 on the low end, to upwards of $150,000 a year,” Mr. Greenhouse said. “I’ve got to tell you, the salaries are terrific. A really good nanny could make $100,000-plus a year, plus benefits. That’s a top nanny.”

Of course, there is the possible awkwardness of a man used to having someone light his cigar for him suddenly finding himself on the other end of the match. But Mr. Greenhouse said he was used to riches-to-rags sorts crossing his threshold: “Divorcees coming in who were married to multimillionaires. All of a sudden they need to go to work and they come to us looking for a personal assistant job: ‘Oh, I know about this because I’ve had the rich lifestyle myself. I know how to take care of rich people’s affairs.’

“I’ve had people that come from all sorts of career paths and all of a sudden they want to be a butler,” he added. Speaking of cigars:

Sell cigars. Great idea, said Anthony Cee, manager at Florio’s in Little Italy, which contains the Three Little Indians Cigar Shop. The image of the Wall Street big shot, the Gordon Gekko type, is exactly what his store likes to project.

“Most of them are cigar smokers, so the education is there,” he said. “If you smoke cigars, I would say frequently you know a little bit about cigars. Professionalism is everything. ‘Dress to impress,’ that’s my motto.” One little problem: no one is buying cigars.

“We have no openings at all,” Mr. Cee said. “Different times, we help everybody. We had a lot of regulars who are out of work right now.”

Shred documents. No one knows sensitive paperwork like a Wall Street veteran. Just ask Al Vari, a salesman with Code Shred, whose service area includes Lower Manhattan.

“I spent 25 years on Wall Street, and now I’m in the shredding industry with two friends of mine,” he said. “It’s not an easy business. It’s a service industry. It’s a trucking company. You send out trucks to shred documents for people who have to shred them by law, or are, in a sense, paranoid.” Mr. Vari warned, however, that this is not a career for a person who has pushed a pencil all his life. “It’s done by a truck driver,” he said. “It’s a labor job.” He considered a possible Wall Street applicant. “These guys, the worst thing that’s happened to them is lead poisoning or deteriorated livers.”

Someone, however, does have to sell the service. “To be an outside salesman, to have contacts in the industries, they could probably make a living,” Mr. Vari said. “Not what they were making on Wall Street though, I’ll tell you that.”

Entertain small children. Because even sad clowns are a hoot at a birthday party, said Gary Pincus, owner of the Send In the Clowns Entertainment Corporation, which plans parties in the metropolitan region.

“We get a lot of calls from Wall Street guys who are looking to work with us,” he said. “They want to change their careers. I told them to call me when our season gets going in March.”

The party racket is more than just balloon animals and squirting flowers. “Selling parties, running parties, everything that goes with the party,” he said. “A Wall Street guy could come over and do magic shows for the kids, play musical games with the kids, do face painting with the kids.” There are positions for disc jockeys, stilt-walkers and mechanical bull servicemen. And, of course, the marquee job.

“We’ll hire clowns from Wall Street,” he said. “No problem.”

Singha
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Re: Perspectives on the global economic meltdown

Postby Singha » 21 Feb 2009 18:43

mexico is being torn apart by govt-mafia drug war

gritty day of the dog slideshow on the streets of Juarez...
http://news.bbc.co.uk/2/hi/in_depth/7886372.stm

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Re: Perspectives on the global economic meltdown

Postby SwamyG » 21 Feb 2009 19:32

vsudhir wrote:Crop Scientists Say Biotechnology Seed Companies Are Thwarting Research
there's a reason why EU and USA persist in giving large agro subsidies. Food sufficiency is the #1 priority for self reliance, IMO, with due apologies to Adam Smith and David Ricardo.

In 2004, EU member countries paid $36 billion in direct subsidies; half of which went to richest 7% of European agricultural producers. In 2005, US paid $23 billion as direct subsidies; of this 72% went to the top 10% of farmers.

Apart from direct subsidies there are indirect subsidies. The OECD countries are spending $350 billion annually on agricultural subsidies.

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Re: Perspectives on the global economic meltdown

Postby svinayak » 22 Feb 2009 05:31

Crisis may be worse than Depression: Volcker

NEW YORK (Reuters) – The global economy may be deteriorating even faster than it did during the Great Depression, Paul Volcker, a top adviser to President Barack Obama, said on Friday.

Volcker noted that industrial production around the world was declining even more rapidly than in the United States, which is itself under severe strain.

"I don't remember any time, maybe even in the Great Depression, when things went down quite so fast, quite so uniformly around the world," Volcker told a luncheon of economists and investors at Columbia University.

Given the extent of the damage, financial regulations must be improved and enhanced to prevent future debacles, although policy-makers must be cautious not disrupt things further while the turmoil is ongoing.

Volcker, a former chairman of the Federal Reserve famed for breaking the back of inflation in the early 1980s, mocked the argument that "financial innovation," a code word for risky securities, brought any great benefits to society. For most people, he said, the advent of the ATM machine was more crucial than any asset-backed bond.

"There is little correlation between sophistication of a banking system and productivity growth," he said.

He stressed the importance of preventing financial institutions large enough to pose a threat to the entire system from engaging in risky behavior such as running hedge funds or trading for its own accounts.


The current crisis had its beginning in global imbalances like a lack of savings in the United States, but policy-makers around the world were too reticent to take action until it was too late, Volcker said.

Now that the crisis had erupted, it was important to take decisive actions, including a more effective regulatory structure and some movement toward uniform accounting systems, Volcker said.

He said all financial institutions that are deemed too large to fail should be subject to increased scrutiny, echoing the findings of the Group of 30, a panel of policy-makers and influential economists, which he leads.

(Reporting by Pedro Nicolaci da Costa and Kristina Cooke; Editing by Tom Hals)

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Re: Perspectives on the global economic meltdown

Postby Arya Sumantra » 22 Feb 2009 10:53

A TEST FOR EUROPE'S COMMON CURRENCY

Until Monday, not a single representative of the euro zone had been willing to discuss the possibility of aid measures for countries in dire financial straits. Instead they have pointed to the Maastricht Treaty, which provides the foundations for the common currency. The treaty prohibits the community of states from providing financial aid to individual euro zone members. Each government is required to keep its own finances in order so that no country becomes dependent on another.

Greece, Ireland and Italy, especially, are seen as wobbling. There's already speculation on the markets that these countries will soon be unable to pay their debts, and what used to be the realm of remote places like South America or Asia could soon play out right in the heart of Europe: the bankruptcy of entire countries.

For German taxpayers, this would be no small sum. If Germany were to pay into a bailout based on its size relative to other euro zone countries, it would be forced to cover one-fourth of the entire tab.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 22 Feb 2009 16:48

Object Lesson: Consumer Frugality in Japan

The economic malaise that plagued Japan from the 1990s until the early 2000s brought stunted wages and depressed stock prices, turning free-spending consumers into misers and making them dead weight on Japan’s economy.

Today, years after the recovery, even well-off Japanese households use old bath water to do laundry, a popular way to save on utility bills. Sales of whiskey, the favorite drink among moneyed Tokyoites in the booming ’80s, have fallen to a fifth of their peak. And the nation is losing interest in cars; sales have fallen by half since 1990.

The Takigasaki family in the Tokyo suburb of Nakano goes further to save a yen or two. Although the family has a comfortable nest egg, Hiroko Takigasaki carefully rations her vegetables. When she goes through too many in a given week, she reverts to her cost-saving standby: cabbage stew.

“You can make almost anything with some cabbage, and perhaps some potato,” says Mrs. Takigasaki, 49, who works part time at a home for people with disabilities.

Her husband has a well-paying job with the electronics giant Fujitsu, but “I don’t know when the ax will drop,” she says. “Really, we need to save much, much more.”...

To better compete, companies slashed jobs and wages, replacing much of their work force with temporary workers who had no job security and fewer benefits. Nontraditional workers now make up more than a third of Japan’s labor force.

Younger people are feeling the brunt of that shift. Some 48 percent of workers age 24 or younger are temps. These workers, who came of age during a tough job market, tend to shun conspicuous consumption.

They tend to be uninterested in cars; a survey last year by the business daily Nikkei found that only 25 percent of Japanese men in their 20s wanted a car, down from 48 percent in 2000, contributing to the slump in sales.

Young Japanese women even seem to be losing their once- insatiable thirst for foreign fashion. Louis Vuitton, for example, reported a 10 percent drop in its sales in Japan in 2008.

“I’m not interested in big spending,” says Risa Masaki, 20, a college student in Tokyo and a neighbor of the Takigasakis. “I just want a humble life.”...

“My husband is retiring in five years, and I’m very concerned,” says Ms. Masaki’s mother, Naoko, 52. She says it is no relief that her husband, a public servant, can expect a hefty retirement package; pension payments could fall, and she has two unmarried children to worry about.

“I want him to find another job, and work as long as he’s able,” Mrs. Masaki says. “We must be ready to fend for ourselves.”


Hard to believe things are so dire even for middle class folks in the developed world. Or maybe japan is a special case? Or perhaps, this situ was there all along but its only getting reported now?

Is this where the US consumer is going? I doubt it the khans are capable of such frugality given that theor govt provides relatives better social safety nets than does the Japanese one.

One blogger writes:

[From the article]'Many are so-called "freeters", or basically long-term temps, doing low level work for employers, the first to be fired, and little hope of advancement even if they do wind up staying with the same company a long time."'

Sounds like the US fields of

1. Computer science.
2. Engineering
3. Physical Sciences- Chemistry/biology

America today is a world of contract temps (ala 3M, IBM, Oracle), temp visas and job insecurity.

You finance people are finally going to get a taste of the real world. You've been sucking the blood out of the rest of us for years.


And one that militates against Americans' willingness to bring babies into the world (esp when comapred tot he rest of the G7). Seeing families with 3 kids stride the mall is not uncommon here in khanland (more than 3 means you lose tax benefits and state edu support for the fourth) - a total rarity in eurostan and Japan too.

Perhaps some good to come out of this worldwide crisis will be less babies born.

After all, as a parent, do you want to roll the dice that your 3, 4, 5, 6 or more children will be able to find gainful employment and remain employed for the remaining 40-70 years of their lives? Or even that YOU will be able to remain employed and support your children until they are on their own?

OTOH, less population means less spending, which goes against all that is held holy in many economies today. Also less people spending means less people working which leads to less people contributing to Social Security, which raises questions of future funding.

The old saying is "Dammed if you do and dammed if you don't" or maybe "Between a rock and the hard place".

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Re: Perspectives on the global economic meltdown

Postby shyam » 23 Feb 2009 05:30

I was thinking about the impact of current economic crisis. One of the major impact I could see is that it will affect funding for new innovations. Universities, govt. labs, private companies and startups that invest in cutting edge research and innovation will have to cut their spendings. In general, there won't be any new earth-shattering innovation for quite some time.

This in turn, made me think about how western civilization was able to make such a significant industrial and technological progress is last three centuries. Answer I have is that they got huge per capita income during that time, and that helped them to finance a lot of research. Source of that money was the loot from places like India and other colonies. When few people get huge amount of wealth, which in turn fuels greed, it was possible to spend money on many things that would increase their rate of accumulation of wealth.

This way you can also explain why India was not able make similar technological advances despite having so much indigenous scientific knowledge. Even though Indians were propserous, per capita income never crossed the threshold level to be able to fund this type of innovations. Nor were they greedy because they were prosperous for several generations.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 23 Feb 2009 20:10

Citi Endgame nigh?

Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people familiar with the situation.

While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%,...

The talks reflect a growing fear that Citigroup and other big U.S. banks could be overwhelmed by losses amid the recession and housing crisis...

Under the scenario being considered, a substantial chunk of the $45 billion in preferred shares held by the government would convert into common stock,...

The move wouldn't cost taxpayers additional money, but other Citigroup shareholders would see their shares diluted...

Bank of America Corp. said Sunday that it isn't discussing a larger ownership stake for the government...

There's no universal agreement on what constitutes nationalization of a bank. In the U.K., the government already owns 43% of Lloyds Banking Group PLC, and last week it moved to increase its ownership of Royal Bank of Scotland Group PLC to 70% from 58%. Those two banks have been classified as "public-sector entities," and as much as £1.5 trillion ($2.136 trillion) of their liabilities have been moved over to the country's balance sheet....


The endgame was clear weeks before. All this dancing is for the galleries only. There was only one radical thing the Govt could've done and that was to have let the banks die. That wasn't happening from the outset itself.

So after housing (the fannie, freddie debacle) and insurance (AIG), its now banking that will be asymmetrically socialized (as in taxpayers pick up the tab but have no hope of sharing in any upside anywhere).

One blogger writes:

Citigroup is apparently throwing itself on the mercy of the court, um, taxpayers, once again, but even the bankster favoring Geithner/Summers team know that the public at large is losing patience with financial firm bailouts in general, and favored treatment towards recidivists like Citigroup in particular. The pound of flesh is about to come due, and there is no Portia in the wings to argue why that would extract more than the contract terms.

The interesting thing is that Citi approached the powers that be (again) yet there does not seem to be any pressing need for a Federal (further) rescue, as in a depositor or counterparty run. Citi merely seems to be wanting to get out in front of the deterioration of its book (the party line is it won't do well in the Treasury stress test, but given the collapse in its stock in the last ten days, one has to wonder).

And that means it must look REALLY ugly.

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Re: Perspectives on the global economic meltdown

Postby Neela » 23 Feb 2009 20:14

shyam wrote:I was thinking about the impact of current economic crisis. One of the major impact I could see is that it will affect funding for new innovations. Universities, govt. labs, private companies and startups that invest in cutting edge research and innovation will have to cut their spendings. In general, there won't be any new earth-shattering innovation for quite some time.

This in turn, made me think about how western civilization was able to make such a significant industrial and technological progress is last three centuries. Answer I have is that they got huge per capita income during that time, and that helped them to finance a lot of research. Source of that money was the loot from places like India and other colonies. When few people get huge amount of wealth, which in turn fuels greed, it was possible to spend money on many things that would increase their rate of accumulation of wealth.

This way you can also explain why India was not able make similar technological advances despite having so much indigenous scientific knowledge. Even though Indians were propserous, per capita income never crossed the threshold level to be able to fund this type of innovations. Nor were they greedy because they were prosperous for several generations.



Shyam, can you think of starting a separate thread for this, especially the rise of Britain. Hopefully this will find backers in Ramana, Arun_S and brihaspati and we could try to gather some info.
BTW, a similar thought ran through my mind some time back.

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Re: Perspectives on the global economic meltdown

Postby Satya_anveshi » 23 Feb 2009 20:31

Neela wrote:Shyam, can you think of starting a separate thread for this, especially the rise of Britain. Hopefully this will find backers in Ramana, Arun_S and brihaspati and we could try to gather some info.
BTW, a similar thought ran through my mind some time back.


Check out the funding approved as part of stimulus plan. As far as I know, there is a huge investments being made in these area.

I agree if this meltdown deepens further then in the medium to long term, the said discussion will surely of help.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 23 Feb 2009 22:21

Shyam, neela

I recall Brihaspati asking for data on exactly how much surplus UKstan stole from India. I know Rajeev Srinivasan has quoted a $9 trillion figure, don't know how that was calculated though.

There's no doubt in my mind that there is some threshold level of income (and concomitant governance, infra and L&O setup) that signifies a wholly new phase in a nation's socioeconomic evolution. Conventional conomic wisdom puts it at ~ 3000 USD p.a. per capita as the starting of the 'middle income' level and posits that here on, growth of demand, of credit, of industry, of innovation and of social indices will be accelerated sans resource and governance constraints.

Gujrat and Punjab are probably already there in PPP terms if not in nominal USD terms and their development (except for the terrible gender ratio) has been laudable. Am hoping rthe next wave takes off into this spectrum (TN, KT, AP, MH) followed by other large laggards.

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Re: Perspectives on the global economic meltdown

Postby John Snow » 23 Feb 2009 22:23

Just visit the Tower of London get a small glimpse of the loot. (aka royal booty)

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 23 Feb 2009 23:34

The collapse in manufacturing

Form the CFO mag. No wonder they argue that the banking sector should be saved come what may. "All hail the fin ummah"!

If sectoral aid is wasteful, why then save the banking system? Not for the sake of the bankers, certainly; nor because state aid will create an efficient financial industry. Even flawed bank rescues and stimulus plans, like the one Barack Obama signed into law this week, are aimed at the roots of the economy's problems: saving the banks, no matter how undeserving they are, is supposed to keep finance flowing to all firms; fiscal stimulus is supposed to lift demand across the board. As manufacturing collapses, governments should not fiddle with sectoral plans. Their proper task is broader but no less urgent: to get on with spending and with freeing up finance.


And present arguments for why sectoral intervention to prop up manufacturing is rather pointless and should be avoided.

Having bailed out the financial system, governments are now being called on to save industry, too. Next to scheming bankers, factory workers look positively deserving. Manufacturing is still a big employer and it tends to be a very visible one, concentrated in places like Detroit, Stuttgart and Guangzhou. The failure of a famous manufacturer like General Motors (GM) would be a severe blow to people's faith in their own prospects when a lack of confidence is already dragging down the economy. So surely it is right to give industry special support?

Despite manufacturing's woes, the answer is no. There are no painless choices, but industrial aid suffers from two big drawbacks. One is that government programmes, which are slow to design and amend, are too cumbersome to deal with the varied, constantly changing difficulties of the world's manufacturing industries. Part of the problem has been a drying-up of trade finance. Nobody knows how long that will last. Another part has come as firms have run down their inventories (in China some of these were stockpiles amassed before the Beijing Olympics). The inventory effect should be temporary, but, again, nobody knows how big or lasting it will be.

The other drawback is that sectoral aid does not address the underlying cause of the crisis-a fall in demand, not just for manufactured goods, but for everything. Because there is too much capacity (far too much in the car industry), some businesses must close however much aid the government pumps in. How can governments know which firms to save or the "right" size of any industry? That is for consumers to decide. Giving money to the industries with the loudest voices and cleverest lobbyists would be unjust and wasteful. Shifting demand to the fortunate sector that has won aid from the unfortunate one that has not will only exacerbate the upheaval. One country's preference for a given industry risks provoking a protectionist backlash abroad and will slow the long-run growth rate at home by locking up resources in inefficient firms.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 23 Feb 2009 23:49

OMG.

Mike Shedlock is on a roll today. Have come to like the guy's POV. Scathing to the point of being unrealistic. SUre, its a less than ideal world, but then how would the world know what is ideal without warriors like shedlock......

Citigroup is a black hole, sucking in every dollar thrown at it and it still wants more. No amount seems enough to save it. Taxpayers have already guaranteed a whopping $300 billion dollars worth of Citigroup debt. Now, two months later, Citigroup is begging for still more capital, pretending that will save it.

Not only is Citigroup a black hole from which no taxpayer dollars can escape, but Geithner's brain is a black hole from which no intelligent thought can escape.

How the hell can you preserve a system this way? The answer is you can't. Nonetheless the Obama administration tries to end bank nationalization talk.

Geithner is attempting to bail out his banking buddies, no more, no less, and he does not give a damn what it costs taxpayers to do so. And while everyone and their brother has hopped on the Nationalization Train, I think there are at a bare minimum a half dozen questions that need to be addressed first.

Citigroup is struggling to remain independent even as it knows full well, that without still more government intervention, it is worthless. In fact, Citigroup is less than worthless because without more taxpayer cash infusions it cannot survive.

To hell with Citigroup. Bust it up and sell it. It's the best possible outcome for everyone involved.


Link

You tell 'em, Mishya!

Taxpayers To Get R@ped In Public-Private "Partnership"
Last edited by vsudhir on 24 Feb 2009 00:08, edited 1 time in total.

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Re: Perspectives on the global economic meltdown

Postby ramana » 24 Feb 2009 00:08

vsudhir, Look up the works of Mr Digby a former British ICS officer on what was the transfer of wealth from India.

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Re: Perspectives on the global economic meltdown

Postby John Snow » 24 Feb 2009 00:28

The biggest blunder in US manufacturing was cost transfering rather than cost cutting and increasing in productivity.
I have worked in GM, It is worse than OF or Public sectors like Heavy engineering corporation Ranchi.

The short sightedness of the CEOs is the curse and crux of the present situation. Last eight years and prior to that also comimg home to roost. The clout came down with relentless borrowing of money from PRC at same time shift manufacturing to it which promptly produced rip off American products. Japanese products, EU products (Philiphs products sold as cyber home, etc etc)

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Re: Perspectives on the global economic meltdown

Postby John Snow » 24 Feb 2009 02:33

AIG in talks with U.S. for more funds
The world's once-largest insurer is in talks with the U.S. government for more funds, despite having been bailed out twice before.


:mrgreen:


"These days you dont get Buck from the Bank" Spinster

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Re: Perspectives on the global economic meltdown

Postby Neela » 24 Feb 2009 03:07

John Snow wrote:The biggest blunder in US manufacturing was cost transfering rather than cost cutting and increasing in productivity.
I have worked in GM, It is worse than OF or Public sectors like Heavy engineering corporation Ranchi.

The short sightedness of the CEOs is the curse and crux of the present situation. Last eight years and prior to that also comimg home to roost. The clout came down with relentless borrowing of money from PRC at same time shift manufacturing to it which promptly produced rip off American products. Japanese products, EU products (Philiphs products sold as cyber home, etc etc)


And that is what I have been harping about for 2 years now. Yes, talent should be retained blah blah....but lock those bonuses away for 3 years atleast. For the kind of money the top guys earn, all they need to do is work for a few years, pocket bonuses unmindful of the ship sunk or saved and move on to the next company.

Those bonuses should be kept within reach but not be served!


Example: This company I know was formed in 2006. But the mid level managers leading groups of 20 or so get bonuses to the extent of Euro 50000 p.a. And that too when the company was just about breaking even. There were 5 hierarchies above the mid level managers. Imagine the bonuses they would get. Bonuses were paid at 150% when the company was doing well in 2007.
The last 6 Qtrs were massive losses. Yet 100% bonuses were paid!
Today the company is insolvent!


There is apparently also a group of people who are pushing to a half-yearly reporting system instead of quarterly.

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Re: Perspectives on the global economic meltdown

Postby ss_roy » 24 Feb 2009 03:19

Do not confuse wealth and money. The brits transfered money out of India, not wealth. They created wealth with that money.

I hate to say it, but bankrolling the european industrial revolution with indian money, has ultimately lifted more indians out of a subsistence existence than any indian kingdom or dynasty (hindus or muslim). For all their looting, the brits used that money to advance science and technology. Now we use it for our own ends.

Indian kings (after the 10th century AD) never built universities, schools and big civil engineering projects other than their palaces. They never tried to advance and systematize science or develop technology. The funny thing is that India had both the brainpower and agnostic culture to keep on advancing. Indian philosophy - astik schools, as well as nastik schools, are far closer to rationalism and agnosticism than the monotheistic religions. But the majority of our ancestors chose to favor bhakti and emotion over reason and logic.

Whether it is maths, algebra, calculus, metal working, medicine, alchemy- there were always enough indians to have kept us in the front. But our ancestors made poor choices, let us not repeat them.

Think about it-

Indians had both the technology (metal working, atypical inks) and the alphabet (devnagri) that would allow for developing gutenberg type printing presses on a large scale.

Indians had the technology, craftsmen, navigators and mathematical/astronomical knowledge to navigate around the world (in ships better than those used by europeans to come to India).

Indians had chemical methods to extract medicinal and toxic alkaloids from plants.

Indians had the understanding that infectious diseases were caused by microbes.

Indians had the chemical knowledge and probably made diethyl ether (the first inhaled anaesthetic).

Indians had the technology and agnosticism necessary to make (and use) small single lens microscopes like those used by Leuwenhock.

Indians were world leaders at producing saltpeter and the craftsmen/knowledge to make better guns and gunpowder. The math and brain to produce better guns was always there..

It takes sheer genius to screw up so thoroughly and extensively. Let us not repeat history..

vsudhir, Look up the works of Mr Digby a former British ICS officer on what was the transfer of wealth from India.

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Re: Perspectives on the global economic meltdown

Postby ss_roy » 24 Feb 2009 03:22

There is another explanation- Mercantilism always leads to stagnation. The velocity of money is proportional to innovation, not the amount.

This way you can also explain why India was not able make similar technological advances despite having so much indigenous scientific knowledge. Even though Indians were propserous, per capita income never crossed the threshold level to be able to fund this type of innovations. Nor were they greedy because they were prosperous for several generations.

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Re: Perspectives on the global economic meltdown

Postby SwamyG » 24 Feb 2009 03:31

Neela wrote:There is apparently also a group of people who are pushing to a half-yearly reporting system instead of quarterly.

I was discussing precisely this - half-yearly reporting with my friend. I hope you are not that friend :-)

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Re: Perspectives on the global economic meltdown

Postby John Snow » 24 Feb 2009 03:50

Gold and precious stones (even sharon stone) is wealth

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 24 Feb 2009 03:53

Good point.

I always wondered why it wasn't us that went out and discovered America or colonised Australia. 10th century onwards. the advent of islam permanently changed geopolitics in India for the worse. It was the dark ages in Europe then. And by sheer chance the Moors were stopped by Charles Martel and expelled by Ferdinand and Isabella in Spain else Eurostan would have been izlamicised and decrept by now.

Chalo, things happened. Wish they'd happened differently but history cannot be changed.

Anyway, with everything going for them, money, wealth (different from money), technology, innovation, systems, institutions and free rational thought, the west did manage to inflict massive wars, famine upon the world and is now finally shrinking demographically so fast that in another 75 yrs, the white race will be less than 10% of the world's people (though controlling upto 40% of its wealth). Perversely, the opposite is exactly what the ummah islamaists wet-dream about. That despite their lack of tech, the low tech womb bombs they'll explode will ultimately grasp the major share of the earth's resources from the shrinking west's cold dead fingers.

Even as we speak, the mighty west has driven into a dead end in terms of its retirement and pensions systems, family structure, basic solvency and the like. Sure, they might yet innovate themselves out of the hole they have themselves dug and I'll applaud should that happen but I'm not holding my breath.

Question is what now.

India has erred and suffered in return. The west has erred also, seems like. Time we shield ourselves from its aftereffects.

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Re: Perspectives on the global economic meltdown

Postby vsudhir » 24 Feb 2009 03:57

Image

Sources close to the company said the loss will be near $60 billion due to writedowns on a variety of assets including commercial real estate.

That massive loss is likely to spur downgrades in its insurance and credit ratings that will force AIG to raise collateral that it doesn't have.


link

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Re: Perspectives on the global economic meltdown

Postby ramana » 24 Feb 2009 04:05

Is Reagan's voodoo economics coming home to roost? the vast expansion in the financial world happened after Reagan took office in 1981.


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