Global Economy

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Raghav K
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Re: GLOBAL ECONOMY

Postby Raghav K » 23 Feb 2009 00:01

Soros Says Financial Crisis Marks End of a Free-Market Model
Feb. 21 (Bloomberg) -- Billionaire investor George Soros said the current economic crisis has its roots in the financial deregulation of the 1980s and marks the end of a free-market model that has since dominated capitalist countries.

Liberalization of the financial industry begun by the Reagan administration has led to a series of breakdowns forcing government intervention, Soros told economists and bankers last night at a private dinner at Columbia University in New York. The global recession, triggered by the collapse of the U.S. housing market, has “damaged the financial system itself,” he said.

Regulators are in part to blame because they “abrogated” their responsibilities, Soros, 78, said. The philosophy of “market-fundamentalism” was now under question as financial markets have proved to be inefficient and affected by biases rather than driven by all the available information, he said.

“We’re in a crisis I think that’s really the most serious since the 1930s and is different from all the other crises we have experienced in our lifetime,” Soros said.

Soros, founder of New York-based hedge-fund firm Soros Fund Management LLC, said last month at the World Economic Forum in Davos, Switzerland, that the Obama administration’s plan to buy toxic assets from U.S. banks won’t be enough to get financial institutions to start lending again.

A more effective approach for restarting the economy would be to inject capital directly into the banks and cut minimum capital requirements, Soros, whose firm oversees $21 billion, has said.

Soros’s Quantum Endowment Fund returned 8 percent last year. That compared with an average loss of 18 percent by hedge funds, according to data compiled by Hedge Fund Research Inc. of Chicago.

To contact the reporter on this story: Walid el-Gabry in New York at welgabry@bloomberg.net


http://www.bloomberg.com/apps/news?pid= ... refer=home

Div
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Re: GLOBAL ECONOMY

Postby Div » 23 Feb 2009 03:18

$8bn 'missing' from Allen Stanford's offshore bank
http://business.timesonline.co.uk/tol/b ... 780591.ece

Allen Stanford: the Antigua Triangle
http://business.timesonline.co.uk/tol/b ... 780606.ece

markos
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Re: GLOBAL ECONOMY

Postby markos » 23 Feb 2009 07:56

Raghav K wrote:Cramer: Nationalization Would Crush America.
He talks about social unrest,chaos,complete collapse.

http://www.thestreet.com/video/10465193 ... erica.html


Would you rather listen to a TV performer like Cramer or economists like Krugman, Stiglitz or even Greenspan? If you are listening to cramer, you might as well listen what Jay Leno and Conan O'Brien has to say about this and I am sure Jon Stewart can provider better insight than Jim Cramer.

Obama will never need to push bank nationalization, he will have republicans doing that work for him(Lindsey Graham, Greenspan et al. is already laying the ground work), just like the work done on stimulus by Schwarznegger and Charlie Crist (who stated today that Obama is the only "national leader"). I am not sure how long the Neanderthal wing of republican party led by Palin and Jindal and congressional republicans can survive when the free-market fundamentalism espoused by these folks get discredited on a daily basis.


Let the stress test designed by Geithner and his staff begin for the banks. For starters, let us see how C and BAC performs. Citi's Vikram Pandit no longer wants to talk about TCE (tangible common equity) for his bank, and that arrogant banker Ken Lewis is a shadow of his former self (sending an email per day to his staff claiming he received assurances that there is no nationalization, well we all know how Dick Fuld throught his company is going to stand tall till 9/14/08 afternoon).

George Will summed it up very well...
http://www.huffingtonpost.com/2009/02/2 ... 68948.html
"With credit now treated essentially as a public utility, the difference between what we have and what nationalization would be is marginal. One number: the market capitalization of Bank of America is $19 billion. Since October they have received $45 billion in public funds. So what's the difference?"


Citi's market cap is $10 billion and received $45 billion with $300 billion "ring-fenced" assets. The point was proven when Citi agreed for mortgage cramdown which was opposed by the entire industry. It is a moot-point whether the shareholders are wiped out and bond-holders are given a haircut. I think markets have already priced the nationalization of C, BAC, FITB etc., irrespective of what Cramer thinks.

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Re: GLOBAL ECONOMY

Postby Sanjay M » 23 Feb 2009 08:13

markos,

it's not the market that's at fault, it's the Fed that's at fault.

Blaming the free market for what's happened, is like blaming your biology because you got cancer after taking steroids.

If the Fed did not exist, then at least the US economy could be in a continuous correction mode, instead of suffering cyclical periodic corrections of increasingly massive proportions.

In today's innovative world, the intervention from the Fed only skews the marketplace to where it could skid out of control. Continuous correction is always better and more tolerable than these sudden batch-doses of it.

I'm concerned that the latest cure could be worse than the disease. It's turning into an exercise for wealth redistribution that produces little economic transformation or value addition for the amount of debt being created.

All that's going to happen is that the US would mortgage away its autonomy of action, and will eventually degenerate into some completely vegetative state. I would take what Krugman says with a grain of salt if I were you, as he's quite the Atlanticist.

markos
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Re: GLOBAL ECONOMY

Postby markos » 23 Feb 2009 08:16

Looks like Citi wants Govt to take additional stake in the company, as much as 40% of common equity. Probably this is what Pandit had in mind as the end-game when he said TCE no longer matters(current govt stake in the form of non-voting preferred shares that needs a hefty payment of $3 billion+ per year)

http://online.wsj.com/article/SB1235351 ... s&ru=yahoo
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.
....
As part of the plan, Citigroup officials hope to persuade private investors that have bought preferred shares -- such as the Government of Singapore Investment Corp., Abu Dhabi Investment Authority and Kuwait Investment Authority -- to follow the government's lead in converting some of those stakes into common stock, according to people familiar with the matter. That would further bolster an obscure but increasingly pivotal measure of banks' capital known as "tangible common equity," or TCE.


The TCE measurement, one of several gauges of a bank's financial strength, gives weight to common shares -- thus the interest in converting preferred shares to common stock.

...
Still, top government officials warned Mr. Pandit that a third trip to the taxpayer trough would probably cost him his job.



After all, that pesky measure called TCE which Pandit would pretend that he is ignoring is important.

http://blogs.wsj.com/deals/2009/01/27/l ... ay-speech/
Pandit dismissed TCE, or tangible common equity, as a way to measure the health of banks :rotfl: :rotfl: . The more accurate number, he argues, is Tier 1 capital, which is the regulatory capital and is not as dependent on stock prices. He says the entire banking sector is essentially well-capitalized for business if you look at Tier 1. “When a bank is forced to raise additional common equity, it creates what I call a negative feedback loop,” he maintains. “Breaking this feedback loop,” he says, is in the interest of customers, regulators, shareholders and pretty much America itself

CEOs of following banks should be fired along with their boards
Citi
Bank Of America
Goldman Sachs
Fifth Third

They should be replaced with more conservative bankers from banks like US Bank, Wells Fargo etc.

As I said, (smart) republicans will be doing the work for Obama administration while neanderthal wing awaits apocalypse.
Last edited by markos on 23 Feb 2009 08:35, edited 1 time in total.

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Re: GLOBAL ECONOMY

Postby markos » 23 Feb 2009 08:26

Actually there is a hilarious minute by minute paraody of Pandit's speech in the same thread - worth reading along with the actual comments from Vikram Pandit

1245: its an honor to have ripped off citi first, then all its shareholders and then taxpayers. 3 touchdowns in succession

1248: real story - citi went into the church to see if it would invest its donations in AAA rated ‘minibonds’

1256: we will re-energize ourselves by offloading our toxic assets onto the american taxpayer :rotfl: :rotfl:

1249: citi has pocketed the tarp money and will be lending 30b of it to pandit and paulson’s friends

1252: citi just pilfered 12b of taxpayer money thru the FDIC

1253: dont look at TCE pls bcs we r in negative equity. look at tier 1 capital pls coz thats where were putting the tarp money. also i’m hiding the liabilities so our tier 1 capital is 10% instead of -100% :rotfl:

100: transparency is important — thats why we took 300b of taxpayer money and haven’t told anyone what products its insurance against

100: citi has made 19 divestitures of profitable companies and distributed the proceeds to executives while keeping the dross so that we can apply for more taxpayer money. its also reduced legacy assets by 35% w/o mentioning that the value of the legacy assets have declined more than 95%

103: i cannot think of a strong financial services company bcs my life has been devoted to setting up ponzi schemes, one of which i sold to citi for 800m and which is now shuttered :rotfl:

107: more talent who have the same vision as me: to be financial bandits with expertise in quadruple sector, 6 sigma shafting (shareholders, taxpayers, customers, employees)

109: we will set up more ponzi schemes within the mortgage industry

110: the more people the better since our credo is to rip off non-executive employees as well

113: we all understand that profitability lies in cooking the books and making up numbers on the balance sheet. like our 2trillion of off balance sheet liabilities suddenly went to the bermuda triangle and found a new universe :rotfl:

117: there is no owners manual explaining how we can rip off so much money w/o any criminal repercussions. i will write a book on this when i retire :rotfl:

118: it dosen’t matter bcs we have neither liquidity nor equity — but we have the taxpayer and skills in cooking the books

121: we need to understand early whether the ******** will pay up, given we lent to a lot of people w no money and no credit in the 1st place

127: nah, just taking taxpayer money w/o any nationalization is fine by us

131: the pandit formula is best — just believe me when i tell u that we r the strongest bank in the world w an ironclad balance sheet

133: of course there will be no impact, they have all been effectively wiped out

134: talk to regulators, but only those that are on my payroll, like my friend hank

136: what? we only bought 1 airplane? time to fire the procurement head :rotfl:

138: lets do this TOGETHER. lets go up and down TOGETHER

Comment by vikram pandit - real speech 3 - January 27, 2009 at 2:06 pm


But I think Pandit was a lot more honest than many of the other execs in the industry (except for his sale of old lane for $800 million that was eventually shutdown, now the entire Citi is worth around 12 times that amount)

markos
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Re: GLOBAL ECONOMY

Postby markos » 23 Feb 2009 09:30

Sanjay M wrote:markos,

it's not the market that's at fault, it's the Fed that's at fault.

Blaming the free market for what's happened, is like blaming your biology because you got cancer after taking steroids.

If the Fed did not exist, then at least the US economy could be in a continuous correction mode, instead of suffering cyclical periodic corrections of increasingly massive proportions.

Everyone has an opinion and you are entitled to yours. It was not the Fed, but market forces that created a monster like Citigroup

I'm concerned that the latest cure could be worse than the disease. It's turning into an exercise for wealth redistribution that produces little economic transformation or value addition for the amount of debt being created.

All that's going to happen is that the US would mortgage away its autonomy of action, and will eventually degenerate into some completely vegetative state. I would take what Krugman says with a grain of salt if I were you, as he's quite the Atlanticist.

I don't care about the labels, but the calibre of people. Krugman stands head and shoulders above hacks like Cramer, whether you are convinced or not.

As for US "mortgaging" its autonomy, I don't see that happening. Currently the ideology that hit vegetative state is that of free-market fundamentalism. As Soviets/Russians buried the corpse of Stalin, it may be time for americans to symbolically bury the body of Reagan and the free-market fundamentalism espoused by him (as Bush Sr. rightly described "voodoo economics")

Stalin's disciple Krushchev buried the body of Stalin from the masoleum. Similarly in the last year of his presidency, disciple of Reagan, Bush Jr. performed the burial of Reagan ideology with Fannie/Freddie/AIG nationalisation

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Re: GLOBAL ECONOMY

Postby Arya Sumantra » 24 Feb 2009 08:25


Tanaji
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Re: GLOBAL ECONOMY

Postby Tanaji » 24 Feb 2009 21:28

The mathematical basis for the various CDOs and CDS created that led to the meltdown

http://www.defaultrisk.com/_pdf6j4/On%2 ... proach.pdf

Wired has a better reading article on it

http://www.wired.com/techbiz/it/magazine/17-03/wp_quant

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Re: GLOBAL ECONOMY

Postby svinayak » 24 Feb 2009 23:48

Image

Shivani
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Toyota

Postby Shivani » 25 Feb 2009 05:51

A Scion Drives Toyota Back to Basics

Fair use excerpts:

The Wall Street Journal wrote:
Image

TOKYO -- Toyota Motor Corp.'s incoming president, Akio Toyoda, has a sobering message for the giant company founded by his grandfather: It has gotten too fancy for its own good.

On Monday, three top executives who helped lead Toyota the past four years -- including Mitsuo Kinoshita, one of the primary architects of the company's global expansion -- announced their retirement.

The Wall Street Journal wrote:He is expected to focus, most of all, on abandoning kakushin, or "revolutionary change," current president Katsuaki Watanabe's term for changing the way Toyota designed its cars and factories. It spawned technological advances, but led to cars that were often costlier to produce.

The Wall Street Journal wrote:"We are not gods, we are not infallible," says Shoichiro Toyoda, speaking of the company's management team. "Sometimes even Tiger Woods misses a shot."

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Re: GLOBAL ECONOMY

Postby Singha » 25 Feb 2009 10:17

BW-
The S&P/Case-Shiller U.S. National Home Price Index plunged 18.2% during the final quarter of 2008, the biggest annual decline in the closely watched index's 21-year history.

Separately, for the month of December alone the Case-Shiller 20-City Composite Index fell 18.5% compared with the previous December, also a record decline. The most severe declines were in Phoenix, Las Vegas, and San Francisco, which all dropped by more than 30% in December compared with December 2007.

But the financial crisis has helped to spread the pain across the nation. Other cities that were holding up relatively well until recently are now seeing a quickening pace of declines. The year-over-year price decline in the New York metro area, which is at the center of the financial meltdown, was 9.2% in December, compared with 8.6% in November and 7.7% in October. Home prices in Charlotte, a major banking hub, fell by 7.2% in December. In October, Charlotte prices fell at just 4.4% compared with a year earlier. And home prices were actually increasing on an annual basis as recently as March 2007.

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Re: GLOBAL ECONOMY

Postby sarulan » 25 Feb 2009 11:15

Schwarzenegger Proposes Releasing 20,000 Inmates, Budget Problem :lol:
http://cbs5.com/local/Schwarzenegger.prison.release.2.615602.html
Gov. Arnold Schwarzenegger is considering the early release of more than 20,000 low-risk prison inmates as a way to save money amid a worsening budget crisis, a newspaper reported Thursday.

Only nonviolent offenders would be eligible, and the prisoners considered for the program would have less than 20 months to go on their terms, The Sacramento Bee reported on its Web site. Sex offenders would not be included.
The governor's office told The Associated Press that Schwarzenegger had not decided to release inmates early and that it was premature to say he would propose it to lawmakers when he releases his budget in January.

Rather, an inmate release is just one of many scenarios under consideration as the state seeks to cope with a budget deficit estimated at $10 billion to $14 billion over the next two fiscal years.

Adam Mendelsohn, Schwarzenegger's communications director, said the governor has not decided what budget proposals he will deliver to the Legislature next month.

He told the AP that the governor had ordered state agencies to make 10 percent cuts "but has not made final decisions on what those 10 percent cuts will be."

Asked how the state could cut 10 percent from the prison budget without releasing some prisoners, Mendelsohn said, "That is the kind of analysis that's currently happening in the administration."

"There are so many different proposals right now in the administration that we are not commenting on every item that people ask about," he added. "This budget presents endless scenarios on what a 10 percent cut means."
The proposal reported by the Bee would cut the prison population by 22,159 inmates and save the state $256 million in the fiscal year that begins July 1. Savings could reach $780 million through 2010.

The proposal also calls for eliminating more than 4,000 prison jobs, most of which would involve guards.
At the same time California faces a darkening budget picture, the state is under federal court pressure to relieve severe overcrowding of inmates.

The crowding is blamed for serious problems in the prison system's health care delivery and mental health services.
An early release of inmates would represent a change of heart for Schwarzenegger, who has steadfastly opposed such a step.

In a July 28 radio address, Schwarzenegger pledged that he would not release any prisoners early, despite severe overcrowding and the threat that federal judges would put a cap on the inmate population.
"I'm here to tell you that the early release of inmates is totally unacceptable," he said, adding that the state had plans to expand prisons to create room for 53,000 inmates.

"We are meeting the challenge head-on to make sure that no prisoner is ever released because of overcrowding," he said in last summer's address. "They should only be let out when they have served their sentences and are ready to return to society. Period."

As an interim step to relieve prison crowding, Schwarzenegger's administration has contracted with private prisons in other states to take thousands of California prisoners.
He and lawmakers earlier this year also agreed to a $7.9 billion building program that will add prison space and inmate medical beds.

David Runnels, undersecretary for operations for the California Department of Corrections and Rehabilitation, declined comment on the budget proposal.
"It's still a budget process, and I have to refer you to the governors' office," department spokesman Oscar Hidalgo said.

Ryan Sherman, a spokesman for the state prison guards union, told the AP the union had not seen the proposal and would not comment on the report.

sarulan
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Re: GLOBAL ECONOMY

Postby sarulan » 25 Feb 2009 11:18

California is in Deep trouble. Looks like the State may not give the Tax Refund on time for the Taxpayers.
:eek:

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Re: GLOBAL ECONOMY

Postby g.sarkar » 25 Feb 2009 11:59

sarulan wrote:Schwarzenegger Proposes Releasing 20,000 Inmates, Budget Problem :lol:
http://cbs5.com/local/Schwarzenegger.prison.release.2.615602.html


My comments:
1. This will be a lose-lose situation. There is not much of a difference between a "violent" and a "non-violent" offender. People that need large amounts of money to finance their drug habits offend constantly, as they find it hard to find money in a lawful manner. So, they will and do offend almost immediately after they are released. Most of them also become violent offenders as their desparation to get a fix grows. Right now it is extremely difficult to find jobs in California, specially the non-skilled type. So, most of those released (if they are at all) will return within 6 months.
2. Medical situation inside the prison has become a black hole, costing billions of dollars. A lot of people do not see the justification of giving inmates first class health care at astronomical costs, when a fraction of that is not available to honest hardworking people on the outside. Commonsense suggests that some limits should be set.
3. The present over-crowding is due to 3 strikes law. As long as this is there, more and more people will get long sentences. The people who voted for this did not realise how expensive it is to keep people in prisons. There is a limit to constructing new prisons. But the republicans, and many democrats too, want to show that they are for law and order and the death penalty. For years they have used this as an election platform. So, there is no easy solution. How much money can you cut from education and other necessary services and give to the prisons?
Gautam

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Re: GLOBAL ECONOMY

Postby Singha » 25 Feb 2009 12:23

iirc Cuba had pulled a similar stunt once, they let loose a huge crowd of violent and malicious criminals and facilitated their emigration into Florida, where these gents promptly
setup networks and got going :mrgreen:

they could cut cost by setting up cheaper prisons in baluchistan and NWFP run by the taliban
outsourcing agency.

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Re: GLOBAL ECONOMY

Postby Nandu » 26 Feb 2009 00:07

g.sarkar wrote:2. Medical situation inside the prison has become a black hole, costing billions of dollars. A lot of people do not see the justification of giving inmates first class health care at astronomical costs, when a fraction of that is not available to honest hardworking people on the outside. Commonsense suggests that some limits should be set.


Can't be helped. Federal courts have ruled that California is providing inadequate healthcare to its prisoners, and have to spend more money on this. There is nothing the state of California can do unilaterally in this, except release prisoners.

A lot of Cali's troubles can be traced to federal policies, IMHO, and the useless federal legislative delegation from the state.

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Re: GLOBAL ECONOMY

Postby vsudhir » 26 Feb 2009 00:20

One solution is to reintroduce the draft, arm these convicts and air drop them into FATA....

See, there's historical precedent that during wartime, such offers of clemency could be made to even enemy soldiers. Many confederate soldiers caught by the Union army would face the choice between swearing loyalty to the union and fighting under the union flag or imprisonment/hanging....

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Re: GLOBAL ECONOMY

Postby krisna » 26 Feb 2009 03:03

One solution is to reintroduce the draft, arm these convicts and air drop them into FATA....


SHQ agrees with this---- it is their home :rotfl:

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Re: GLOBAL ECONOMY

Postby Arya Sumantra » 26 Feb 2009 03:07

Obama Needs a 'Not To Do' List

The global economic crisis is exposing the president's preoccupations as the soppy indulgences they always were

Put away the global warming panic. Mankind's contribution to rising CO2 levels raises serious questions, but the tens of billions poured into climate science have, by now, added up only to a negative finding. We don't really have the slightest idea how an increase in the atmosphere's component of CO2 is impacting our climate, though the most plausible indication is that the impact is too small to untangle from natural variability.

Put away the "energy independence" conceit. This notion, a favorite of Tojo and Hitler, was debunked by Churchill, who reasoned that true energy security came from a diversity of suppliers, not the foolish pursuit of self-sufficiency.

Put away Ponzi welfarism. The day is gone when politicians could have hoped to have begun and ended their careers before the public ever faced the implosion of redistribution programs that depend on the workforce growing faster than the retired population.

Put away the idea that more government control is the cure for health care. We already bribe, through supremely asinine tax policy, the most affluent, capable consumers on the planet not to use their smarts to make sure the system returns value for money.

Put away class warfare tax politics: Only a flatter, less distorting tax code is compatible with the kind of growth needed to get us out of the debt mess without inflation.


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Re: GLOBAL ECONOMY

Postby Arya Sumantra » 26 Feb 2009 04:48

Officials Unveil Details of Stress Tests

Under the plan, which includes "stress tests" aimed at measuring how the banks would hold up under both baseline and extreme economic situations, institutions would have six months to raise private capital before getting a government-issued capital buffer

Regulators expect to complete the tests by the end of April.

Banking regulators in their joint release said, "Currently, the major U.S. banking institutions have capital in excess of the amounts required to be considered well capitalized."

The U.S. is requiring banks with assets of more than $100 billion to participate in the stress tests. Those banks will be given immediate access to government capital if needed.


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Gaussian copula function

Postby Shivani » 26 Feb 2009 06:07

Recipe for Disaster: The Formula That Killed Wall Street

wired.com wrote:In the mid-'80s, Wall Street turned to the quants—brainy financial engineers—to invent new ways to boost profits. Their methods for minting money worked brilliantly... until one of them devastated the global economy.

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Re: GLOBAL ECONOMY

Postby Arya Sumantra » 26 Feb 2009 08:42

Meltdown 101: Understanding financial stress tests

The banks will be tested under two economic scenarios: what the government calls a "baseline" and "a more adverse scenario," reflecting a deeper and longer recession.

The scarier scenario includes a 3.3 percent decline in gross domestic product this year; unemployment rising to 8.9 percent this year and 10.3 percent in 2010, from the current 7.6 percent (already the highest in more than 16 years); and home prices plunging 22 percent this year and 7 percent next year.

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Re: GLOBAL ECONOMY

Postby g.sarkar » 26 Feb 2009 09:56

Nandu wrote:Can't be helped. Federal courts have ruled that California is providing inadequate healthcare to its prisoners, and have to spend more money on this. There is nothing the state of California can do unilaterally in this, except release prisoners.
A lot of Cali's troubles can be traced to federal policies, IMHO, and the useless federal legislative delegation from the state.

When I joined Corrections, the doctors were old or they had bad records or were in the verge of losing their licenses due to malpractice. Some were so old, that I would be afraid that they may get a heart attack on the spot while I was talking to them. The pay was bad, and no competent physician would work in prison. Now they are getting about $20-25K per month, and a lot of new talent has been attracted here, a good number are Indians. Everyone connected with medicine (drs, nurses, pharma etc) are making a ton of money in prison. The prisoners on the other hand are playing the system as much as they can. If it suits them, they become a mental health patient, or they become handicapped so that they do not have to work. They get expensive wheel chairs, put in bottom bunks, given special meals etc. Some are put in group therapy, anger management or substance abuse programs. Just before they leave, or if they need some program when they must become fit, they are cured by a miracle! I do not know how long this farce will go on.
Gautam

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Re: GLOBAL ECONOMY

Postby Nayak » 26 Feb 2009 10:23

AoA and Alla Hu Fubar

2 Money Managers Held in New Wall St. Fraud Case

http://www.nytimes.com/2009/02/26/busin ... f=business

Article Tools Sponsored By
By ZACHERY KOUWE
Published: February 25, 2009

For two decades, Paul Greenwood and Stephen Walsh looked like Wall Street wizards.

Their supposed investment prowess lured hundreds of millions of dollars from public pension funds and universities and earned the two lavish trappings of success: stately homes, a stake in the New York Islanders and, for Mr. Greenwood, a horse farm that once belonged to Paul Newman.

But on Wednesday morning, federal agents arrested the two money managers on accusations filed by the United States attorney for the Southern District of New York in what has become all too familiar on Wall Street: Their investment fund was in fact a $667 million fraud — a small-scale version of the $50 billion fraud that Bernard L. Madoff is suspected of orchestrating.

But unlike Mr. Madoff, who is accused of masterminding a global Ponzi scheme, Mr. Greenwood and Mr. Walsh simply stole their investors’ money, the authorities said. Their two firms, the WG Trading Company and Westridge Capital, misappropriated funds from a host of deep-pocketed investors, including state and city pension funds, Carnegie Mellon University and the University of Pittsburgh.

Theirs is the latest in a series of alleged Wall Street frauds that have come to light as the bear market has deepened, exposing wrongdoing that was hidden in good times, when so many were making money. Indeed, federal agents arrested two other money managers on Wednesday in separate fraud cases.

Mr. Greenwood and Mr. Walsh never developed the sort of wide following that Mr. Madoff had enjoyed. But their arrest is nonetheless a startling turn of events for the pair, who first rose to prominence on Wall Street in the 1980s. They had devised a computerized trading program called Shark, which enabled traders to spot investment opportunities in the stock, bond and futures markets.

Wang Laboratories bought Shark in 1986, giving the men enough money to buy a stake in the Islanders, which they later sold. In 1996, they began soliciting money from investors for a new investment fund.

It is unclear when their apparent scheme began. According to the F.B.I., things began to fall apart in December when, alarmed by the market plunge and Mr. Madoff’s exposure, investors asked for their money back.

It was too late. According to the F.B.I., Mr. Greenwood, 61, and Mr. Walsh, 64, over the years had siphoned off most of the money and used itto finance high lifestyles and cover the costs of recent divorces. :rotfl: :rotfl: :rotfl:

Mr. Greenwood’s extravagances included an $80,000 collection of Steiff teddy bears and Old Salem Farm, a 54-acre riding school and horse farm in the Westchester County town of North Salem that he had bought from Mr. Newman and Joanne Woodward. He has since sold Old Salem.
:shock: :shock: :shock:

Those involved include the Iowa Public Employees’ Retirement System, which invested $339 million with the pair; the University of Pittsburgh, which had invested $65 million; and Carnegie Mellon, which had invested $49 million. It was the universities that first alerted the Securities and Exchange Commission that something was amiss.

WG Trading also received nearly $90 million from the Sacramento Employees’ Retirement System. The Pennsylvania Employees’ Retirement System was readying a $1 billion investment in WG Trading when it learned this month that the National Futures Association, which oversees futures brokers, was auditing the firm.

The audit revealed that Mr. Greenwood and Mr. Walsh had taken out loans from the funds totaling $554 million and had invested $147 million in entities controlled by them.

Bail was set at $7 million each, and they were ordered to post $1 million in cash or property that was not from the apparent fraud.

Also arrested by the F.B.I on Wednesday was Mark Bloom, 57, who worked for WG Trading until 2001, when he started his own investment vehicle, the North Hills Fund.

Prosecutors accused Mr. Bloom of taking personal loans from North Hills to buy a $5.2 million Manhattan apartment and of hiding huge trading losses.

Separately, authorities arrested James Nicholson, founder of Westgate Capital Management, at his home in Saddle River, N.J. He is charged with a securities fraud that may have cost investors as much as $100 million since 2004.

shyam
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Re: GLOBAL ECONOMY

Postby shyam » 26 Feb 2009 13:15

I heard that after Madoff's scam (and fund of funds scams), many people have started getting worried about the real state of their financial investments and have started withdrawing from various funds. This has started affecting the money available to many VC firms and many of them have started negating their commitments or reducing their investments to many startups. In Bay Area, I know one that went belly up and another that laid off most of their employees due to change in VC funding status in last minute.

Singha
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Re: GLOBAL ECONOMY

Postby Singha » 26 Feb 2009 18:42

my sources report between 50 to 100 comrades casualty in india.

Cisco Confirms Global Job Cuts

By Andrew R Hickey, ChannelWeb
5:53 PM EST Wed. Feb. 25, 2009
Cisco Systems (NSDQ:CSCO) confirmed to Channelweb.com that it has eliminated a number of positions in the U.S. and abroad as part of its realignment and restructuring initiative that will chop $1 billion out of its operating budget throughout fiscal year 2009.

Cisco would not confirm on Wednesday how many positions were cut. Sources, however, said employees started receiving notifications on Tuesday, and roughly 250 of the positions eliminated were based in San Jose, Calif. Overall, sources said, the number of employees affected was fewer than the 1,500 to 2,000 that Cisco CEO John Chambers hinted at on the company's earnings call for the second fiscal quarter.

According to the networking giant, the staff reduction is part of the "limited restructuring" process Chambers previously alluded to.

"Cisco is constantly evaluating its business priorities, resources and overall employee alignment as part of our business management process," a Cisco spokesperson said in a statement Wednesday. "This limited restructuring is part of our ongoing, targeted realignment of resources and was previously discussed on our fiscal second quarter 2009 earnings call."

During the Feb. 4 earnings call, Chambers shied away from calling potential job cuts layoffs.

"Also in the spirit of complete openness, we are constantly realigning and restructuring resources as a part of our normal business process," Chambers said on the call. "As an example, in fiscal year 2008 and the first quarter in 2009, we realigned and restructured approximately 1,000 jobs of a global workforce of 67,000 employees. With the speed that we are moving on so many fronts, we will continue this normal process, which in the near term could result in the reduction of 1,500 to 2,000 jobs. This is something we will continue to do both in good and challenging times, but thought it was important to provide this level of detail, especially to our employee family during these uncertain times."

Chambers added that Cisco defines a layoff as a "critical mass to justify the loss of business momentum, impact on employees and disruption in key projects." He said he considers a company-wide layoff as at least 10 percent of the workforce.

"In very direct terms, we are not going to consider a layoff at this point in time," Chambers said on the call. "While there are no guarantees, we think the odds are reasonable that if we execute effectively as outlined on this call, we may be able to avoid large downsizing events."

Sources told Channelweb.com that some of the affected employees could be redeployed to other areas within Cisco. Those that are not redeployed will receive a separation package that includes severance pay and job-transition assistance.

This week's job cuts come after normally resilient Cisco's revenue dropped 7.5 percent year over year to $9.1 billion for the second quarter. Coming off the down quarter, Chambers said Cisco expects third fiscal quarter revenue to drop between 15 and 20 percent year over year, prompting him to call the current economic state "The biggest challenge of our lifetime."

Cisco has vowed to continue its aggressive cost-cutting initiative, which Chambers said will reduce operating expenses by $1 billion by the end of fiscal 2009. Along with job cuts and resource realignment, other cost-cutting initiatives within Cisco include a hiring freeze and a sweeping reduction in corporate travel.

Vipul
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Re: GLOBAL ECONOMY

Postby Vipul » 26 Feb 2009 22:43

Wall Street trading gets Mumbai-ed.

Even as the Obama administration in the US frets over H1B immigrants, one more Wall Street job has just got offshored -- to the Chandivali suburb on the fringes of Powai in Mumbai.Come April and a 150-seater trading desk will go live in this upcoming suburb, hours after closing bell on Dalal Street.Fountain Securities Analysis, a Mumbai firm, has bagged a deal for an undisclosed sum to outsource the proprietary trading activities of a US-based broker.

Going by sources in the know, the company will recruit and train local talent to trade in US securities listed in the Nasdaq and New York Stock Exchange (NYSE).Fountain, which is said to have a 'sister concern' operating in Pune, has sounded out local institutes that train candidates for securities market jobs and the selection process has commenced already.

The company plans to scale up the operations to a 650-strong unit eventually.

Knowledge process outsourcing units focusing on equity research were already operating in the country's business process outsourcing (BPO) hubs. But the current directionless state of markets in the US has changed the brokers' focus to more pragmatic pursuits like jobbing and arbitraging. And even here, they want to cut corners.

As G C Sharma, a faculty with BIFM, an institute training capital market aspirants, says a few outsourcing companies focusing on equity research for overseas markets had come up in the last 3-4 years.

"Most worked night shifts. These units were located in Pune, Mumbai, Delhi and Gurgaon. But since the US market is not in a good state, the focus is now shifting towards jobbing and arbitraging as these are considered less risky and more lucrative in the current environment."

The economies work like in any other BPO as the US entity gets its job done at a fraction of the cost it would have incurred on it in the US.For young graduates like Rahul, 21, who had shelled out Rs 70,000 for a 4-month securities market course, the opportunity comes as a godsend.

"For beginners, local brokers used to pay Rs 7,000 during the training period. Now, with the volumes so low and there being very little scope for arbitrage, even these jobs have dried up. This is a good opportunity. And at Rs 10,500 to start with, it's like getting paid for having jalebi," says the youngster.

Fountain officials have told some of the successful applicants that the selection will be followed by a 21-day training programme, wherein the participants will be given a primer on the US markets. They will also be taught the methods including short selling, arbitraging and other intraday techniques.

The potential recruits are being lured with a 50:50 profit sharing model, which promises to make them millionaires if they are good enough and hang around long enough.In the first three months, though, the BPO will pay only a fixed sum of Rs 10,500 and hold back the performance incentive (share in profits). From the fourth month onwards, the trader can take home 50% of the profit he makes on trading.

You could be making lakhs, says Raghavendra, a 40-year old Nifty trader, who failed the 15-minute aptitude test on Friday. This is the first level screening, which tests the speed and accuracy of the candidate in solving simple mathematical problems, and is followed by a personal interview."I had brought my performance report in Nifty trading. They didn't even see it. What is the point in asking simple interest? I didn't even bring my calculator. So I got only four marks," the Nifty trader rued.

The point to note is that even experienced traders are available for hire as the market volume has shrunk significantly, says Vikram Rathi, executive director of Delhi-based BLB Ltd, which runs one of the largest arbitrage desks in the country with a 750-strong dealer network. "The jobbers here get typically 50-70% of their trading profits. It varies from player to player. Since the markets are the way they are, a lot of people are available."

Rathi says outsourcing of jobbing is workable given the technology advancements. But he feels working out the cost structure is crucial. "Each player - the foreign client, the local service provider and the jobber - will want his share of the pie. So, the cost structure can get out of hand."
(Names of candidates changed)

Nandu
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Re: GLOBAL ECONOMY

Postby Nandu » 27 Feb 2009 05:22

Don't want to name the co., but I am out as part of a layoff today.
No, not Cisco.

Singha
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Re: GLOBAL ECONOMY

Postby Singha » 27 Feb 2009 10:23

:(

vina
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Re: GLOBAL ECONOMY

Postby vina » 27 Feb 2009 10:39

Sorry to hear that Nandu. Times are tough indeed. Most importantly, dont lose hope, dont let your confidence down and always NEVER let someone else except YOU define your self worth. This too shall pass eventually.

Network . Network . Network. Remember, networks get you jobs. Even if there isn't one right now , you will be there when there is one.

Sanjay M
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Re: GLOBAL ECONOMY

Postby Sanjay M » 01 Mar 2009 13:13

Senor Chavez is sending the army to seize control of the rice plants:

http://news.bbc.co.uk/2/hi/americas/7917176.stm

SK Mody
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Re: GLOBAL ECONOMY

Postby SK Mody » 01 Mar 2009 13:45

Below the BBC article is the following solicitation:
Are you in Venezuela? Do you or your family work at the rice producing plants? What are your experiences? Send us your comments using the form below.


That is really so sweet of them. I'm sure they will get lots of replies from rice workers, which they can then publish as authentic and unbiased information emanating from their vast network :rotfl: of reporters in venezuela.

derkonig
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Re: GLOBAL ECONOMY

Postby derkonig » 01 Mar 2009 16:12

Sanjay M wrote:Senor Chavez is sending the army to seize control of the rice plants:

http://news.bbc.co.uk/2/hi/americas/7917176.stm


Viva le revolucion. Now, how long before the messiah also starts seizing private property?

Arya Sumantra
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Re: GLOBAL ECONOMY

Postby Arya Sumantra » 01 Mar 2009 21:22

HSBC takes £17bn hit on bad loans

HSBC is to own up to the full horror of its American sub-prime business, Household, when it unveils a £7 billion goodwill write-off in addition to a £17 billion provision against rising bad loans.

The provisions will be announced tomorrow alongside a heavily discounted £12 billion rights issue — the biggest ever held in Britain — and a dividend cut, as Stephen Green, the bank’s chairman, moves to shore up its balance sheet.


John Snow
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Re: GLOBAL ECONOMY

Postby John Snow » 01 Mar 2009 22:03

Nandu keep your chin up. I have seen 4 major recessions and two mini in this country (last 27 yrs).

With the average Indians education you will be in the game very soon. Dont get low (easy to say I know) If you ever get low come to BRF and blast MMS and MKN what do you they are there for? :mrgreen:

It feels good there after trust me :wink:

negi
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Re: GLOBAL ECONOMY

Postby negi » 02 Mar 2009 01:43

^^ Not a good idea if you are not a BRF oldie adminullahs are sensitive when it comes to MMS and Co :P , last time I did that I was banished for a month (I had to request predators to ban my IP for overcoming withdrawal symptoms). :oops:

Sanjay M
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Re: GLOBAL ECONOMY

Postby Sanjay M » 02 Mar 2009 05:53

Eastern Europe Back Out in Cold Again:

http://www.voanews.com/english/2009-03-01-voa20.cfm

http://www.timesonline.co.uk/tol/news/w ... 828323.ece

http://www.nytimes.com/2009/03/02/world ... 2euro.html


Looks like hard-won Cold War victories and colour revolutions are unraveling.

Sanjay M
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Re: GLOBAL ECONOMY

Postby Sanjay M » 02 Mar 2009 05:56

SK Mody wrote:Below the BBC article is the following solicitation:
Are you in Venezuela? Do you or your family work at the rice producing plants? What are your experiences? Send us your comments using the form below.


That is really so sweet of them. I'm sure they will get lots of replies from rice workers, which they can then publish as authentic and unbiased information emanating from their vast network :rotfl: of reporters in venezuela.


Atlanticists despise Latin American socialists, but eagerly embrace socialist firebrands in Asia. My theory is that Europeans fear Asian business interests can challenge European economic power, but meanwhile they want to protect Latin America's European-dominated business community and European-instilled religious institutions like the Roman Catholic Church from being targeted by socialist political forces.

Vipul
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Re: GLOBAL ECONOMY

Postby Vipul » 02 Mar 2009 21:59

Mumbai's 'the' place to go for finance pros.

"Today, if you are in high finance, you should be in Mumbai, Shanghai or Dubai. Else, be ready for a goodbye," goes a popular joke in international circuit.As the global financial nerve centres such as London, New York and Tokyo suffer a crippling recessionary stroke, resulting in wholesale job losses, high quality talent is looking for opportunities in the East.

And among Asian destinations, Mumbai is emerging as the most sought after as more people are drawn to the Indian financial sector's relative nascence and insulation from toxic assets, not to forget the ease of communication on account of the usage of English. Doubting Thomases be damned. To the global job hunter, the Tatas, Birlas, ICICIs and IDBIs today sound a lot safer than most marquee names :D .

Corporate chieftains in the financial services industry, who DNA Money spoke to, agree that there is an unprecedented rise in interest from overseas job hunters.
Puneet Nanda, executive vice-president, ICICI Prudential Life Insurance, says the number of CVs he gets from the US is ten times those from India. "It's a mix of foreign nationals and NRIs. There are a number of foreign nationals who are willing to relocate to India."


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