Global Economy

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Global Economy

Postby Nayak » 05 May 2008 14:32

Last page of the thread is found here - clicky

Please continue here.

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Postby svinayak » 06 May 2008 02:04

The Great Depression: Housing Again!
The housing starts data available
from the Census Bureau begin in
1959 and leave us wondering what
happened earlier, but in searching
for references I ran across the image
to the right of the earlier data in
Ketchum(1954). Look at that:
housing starts declined beginning in
1925! Industrial production didn’t
begin its nosedive until July 1929
and the Dow Jones Average peaked
in October 1929. How weird is that!
Problems in housing led the great
depression by a full three years.
Without doing the hard work to
confirm, it seems possible that the
increase in the discount rate in 1928
was very hard on an already
weakened housing sector, and set in
motion the events that led to the
Great Depression, dropping housing starts dramatically from over 900 thousand in 1925
to under 100 thousand in 1933. My point here, however, is that we should be looking for
the roots of this episode in the operation of the banking system in 1922-1924 which
allowed housing starts to peak so high But, of course, I must defer to Bernanke’s(2000)
Essays on the Great Depression, which does not emphasize housing.

Edward E. Leamer. (September 2007). "Housing is the Business Cycle." ... w13428.pdf

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Postby Nayak » 06 May 2008 11:46

We had to survive without a paycheck

For the Monitor
May 06, 2008 - 12:00 am

After my husband lost his job, we spent four months with no income whatsoever. Zero. Zilch. Nothing.

We applied for state assistance, but the process was so long and involved, and the rules so contradictory, that we just gave up.

How did we survive?

At first, we paid for gas and groceries on the credit card, which is an extremely foolish thing to do. We came to our senses after a few months, cut up the credit card and are still working on paying it off. Meanwhile, my health is poor enough that I cannot work outside until it stabilizes, and we have my medical debts to pay off, as well.

We haven't had health insurance for years, due to the instability of my husband's chosen field (he's an I.T. professional). The annual layoffs have made it impossible for us to really get ahead. Just as soon as we have any significant amount of cash saved up, his department gets outsourced to India, or the company does an Enron or the boss has to sell the company to pay for his divorce . . . and there goes our savings while we try to get by until my husband can find work again.

We live with my parents, who are extremely generous to us regarding rent. We had already saved two months' worth of living expenses, but that was soon exhausted due to my medical bills. We cashed in my husband's Roth IRA, which after we paid the early withdrawal penalty, was enough to get us by a little longer. Once I was able to sell enough of my handmade jewelry to pay for that week's groceries.

Meanwhile, we were selling off some of our possessions. The TV went early on. It was followed by some clothes, the coffeemaker, a few of our son's outgrown toys and some furniture. My husband sold some textbooks and computer parts. We talked of selling my computer as well but were just barely able to hang on to it by skimping on the car repairs. When one car came up for registration, we did not renew it. We saved gas by having him ride his motorcycle until after it snowed.

For groceries, we stopped buying anything except staples: meat, vegetables, rice, flour. We made our own bread and stopped buying packaged mixes for anything. We stopped buying much meat and learned how to cook with beans and other sources of protein. We started buying our milk and eggs straight from the farm, where they're a little cheaper.

Instead of using the electricity to run the dryer, we started hanging clothes out to dry instead - yes, even in winter. Instead of buying expensive cleaners, we started cleaning with vinegar and baking soda. Now we're healthier because of eating better and because we're not using toxic cleansers anymore. We have discovered that our house gets just as clean with baking soda, borax, and vinegar as it did when we were using Pine-Sol, Tide and bleach, and it's more environmentally responsible.

Sometimes the help we got seemed miraculous. Whenever my truck was running on fumes, that's when a buyer would show up for something I had advertised. When we had absolutely run out of food and had nothing to buy groceries, a check came in the mail for a rebate I had sent in almost a year ago! Someone once sent us $100 in grocery gift cards in an envelope with no return address. We never found out who.

My husband finally got another temp job, which looks as if it will become permanent soon. With careful spending and budgeting, we may be able to pay off the credit card and my medical bills within a year of his working at this job. The back rent owed to my parents may take longer.

We use the paper-envelope system of budgeting, because it's easiest to keep track of where the money goes and how much is allotted to which bill each week. He gets paid weekly, so we put aside a little each week for each monthly bill. It is taking a discouragingly long time to dig out of the hole that this last year had left us in, but I am sure that if we're careful we'll be able to do it.

If not, we will sell off some more of our things.

(Andrea Graham-Melville lives in Concord.)

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Postby SwamyG » 06 May 2008 22:12

Financial doom and other fairy tales
An assessment of the USA and global economy.

Some interesting quotes:
Today, jobs are outsourced to India and Poland -- and could be outsourced to New Jersey and California. Economies such as China's and India's can chug on ahead even when the U.S. economy slows down.

Singha: You have been predicting lower standard of living in USA. Jubak agrees with you :
I believe that the world will somehow muddle through with a lower standard of living in the United States, with much higher taxes to pay for the liabilities we refuse to fund today and with a painful disruption of our lives because we refuse to plan for an orderly transition away from oil. But still, it will be nothing resembling the apocalypse these authors envision.

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Postby SwamyG » 06 May 2008 22:15

A question to the economic gurus, so why is the standard of living in USA predicted to decline? Any gyan thrown my way is deeply appreciated.

I know dollar value is declining, things are getting expensive for the aam American. Is that why or there deeper things brewing behind the scenes?

thanks in advance.

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Postby John Snow » 06 May 2008 22:26

When real wages decline (i.e. inflation adjusted wages, actually disposable incomes) the standard of living will decline. Generally this happens over a period of time, sudden changes are rare, but one can not rule out in case of supply side shocks, or natural calamities for which no Provisions ( provisions also means food stuff :wink: ) are made ...
If the calamity is providential then no provisional effort can mitigate completely.


Real wages have been declining in USA, the purchasing power of the middle class is eroding along with the dollar value.

'When the cost of 6 pack Beer is equal to the cost of a gallon of gas'

The slogan becomes Drink but dont Drive

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Postby svinayak » 07 May 2008 01:11

SwamyG wrote:A question to the economic gurus, so why is the standard of living in USA predicted to decline? Any gyan thrown my way is deeply appreciated.

I know dollar value is declining, things are getting expensive for the aam American. Is that why or there deeper things brewing behind the scenes?

thanks in advance.

Look at it this way. The std of living was artificially increased over the last 15 years with borrowed money. Now it has to correct to normal level.

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Postby Paul » 07 May 2008 02:03

SwamyG wrote:A question to the economic gurus, so why is the standard of living in USA predicted to decline? Any gyan thrown my way is deeply appreciated.

I know dollar value is declining, things are getting expensive for the aam American. Is that why or there deeper things brewing behind the scenes?

thanks in advance.

When I was working in Louisiana in the late 90s, people I knew drove all the way to Alabama just to buy doughnuts from a shop they liked....needlessly to say they will not be doing this in the future.

When you see media whinings about declining living standards, this is what they are referring to. Otherwise things will be fine.

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Postby shyam » 07 May 2008 02:20

Are you guys saying that US did not create much wealth of its own in the last 15 years? I would agree that they did not bother to save.

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Postby SwamyG » 07 May 2008 03:18

Way back, when kirana stores or 'palasarakku kadai' still were the vogue I remember the process of buying rice, wheat or pulses. The shop keeper has his "pan balance". Say I was buying 10Kg of rice, he would load the 10kg stone first and then start adding rice slowly. The pan with the stone would not budge....he keeps adding, adding, adding....suddenly at one point the pan moves and he balances the two. Apart from the psychology of adding and not removing the commodity, it use to fascinate me that all the while the 10kg was able to withstand the increase of rice, but then the last handful of rice suddenly tilted things against it (something like the last straw on the camel's back).

Can we use that analogy here, the Western countries can withstand the emerging countries growth and continue growing, but there will be one point in time when suddenly they would have to adjust to new times? Any thoughts?

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Postby Ardeshir » 07 May 2008 03:35

SwamyG wrote:Can we use that analogy here, the Western countries can withstand the emerging countries growth and continue growing, but there will be one point in time when suddenly they would have to adjust to new times? Any thoughts?

Swamy G, I can see that happening right now. Perhaps it helps that I am a 'futures' trader.
The shift is happening, it might be gradual, but it is a mathematical certainty. Perhaps I can elaborate on it at a later time.

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Postby John Snow » 07 May 2008 04:44

Wealth creation is different from

Wealthy living but not healthy living.

Asset inflation is not wealth generation.

Wealth measured in a monetary unit of your own creation with no "peer reveiw" is not wealt creation but wealthy manipulation.

Wealth retains intrensic value (that is demand exists at any price, higher or lower) imagine if everybody digs and gets Kohinoor diamond!

Even then not everybody will live in glass houses and throwing precious stones !


Postby Raju » 07 May 2008 07:48

Perhaps 60% Of Today's Oil Price Is Pure Speculation

By F. William Engdahl

The price of crude oil today is not made according to any traditional relation of supply to demand. It's controlled by an elaborate financial market system as well as by the four major Anglo-American oil companies. As much as 60% of today's crude oil price is pure speculation driven by large trader banks and hedge funds. It has nothing to do with the convenient myths of Peak Oil. It has to do with control of oil and its price. How?

First, the crucial role of the international oil exchanges in London and New York is crucial to the game. Nymex in New York and the ICE Futures in London today control global benchmark oil prices which in turn set most of the freely traded oil cargo. They do so via oil futures contracts on two grades of crude oil-West Texas Intermediate and North Sea Brent.

A third rather new oil exchange, the Dubai Mercantile Exchange (DME), trading Dubai crude, is more or less a daughter of Nymex, with Nymex President, James Newsome, sitting on the board of DME and most key personnel British or American citizens.

Brent is used in spot and long-term contracts to value as much of crude oil produced in global oil markets each day. The Brent price is published by a private oil industry publication, Platt's. Major oil producers including Russia and Nigeria use Brent as a benchmark for pricing the crude they produce. Brent is a key crude blend for the European market and, to some extent, for Asia.

WTI has historically been more of a US crude oil basket. Not only is it used as the basis for US-traded oil futures, but it's also a key benchmark for US production.


'The tail that wags the dog'

All this is well and official. But how today's oil prices are really determined is done by a process so opaque only a handful of major oil trading banks such as Goldman Sachs or Morgan Stanley have any idea who is buying and who selling oil futures or derivative contracts that set physical oil prices in this strange new world of "paper oil."

With the development of unregulated international derivatives trading in oil futures over the past decade or more, the way has opened for the present speculative bubble in oil prices.

Since the advent of oil futures trading and the two major London and New York oil futures contracts, control of oil prices has left OPEC and gone to Wall Street. It is a classic case of the "tail that wags the dog."

A June 2006 US Senate Permanent Subcommittee on Investigations report on "The Role of Market Speculation in rising oil and gas prices," noted, "there is substantial evidence supporting the conclusion that the large amount of speculation in the current market has significantly increased prices."

What the Senate committee staff documented in the report was a gaping loophole in US Government regulation of oil derivatives trading so huge a herd of elephants could walk through it. That seems precisely what they have been doing in ramping oil prices through the roof in recent months.

The Senate report was ignored in the media and in the Congress. (those who control oil also control the media)

The report pointed out that the Commodity Futures Trading Trading Commission, a financial futures regulator, had been mandated by Congress to ensure that prices on the futures market reflect the laws of supply and demand rather than manipulative practices or excessive speculation. The US Commodity Exchange Act (CEA) states, "Excessive speculation in any commodity under contracts of sale of such commodity for future delivery . . . causing sudden or unreasonable fluctuations or unwarranted changes in the price of such commodity, is an undue and unnecessary burden on interstate commerce in such commodity."

Further, the CEA directs the CFTC to establish such trading limits "as the Commission finds are necessary to diminish, eliminate, or prevent such burden." Where is the CFTC now that we need such limits?

They seem to have deliberately walked away from their mandated oversight responsibilities in the world's most important traded commodity, oil.

Enron has the last laugh

As that US Senate report noted:

"Until recently, US energy futures were traded exclusively on regulated exchanges within the United States, like the NYMEX, which are subject to extensive oversight by the CFTC, including ongoing monitoring to detect and prevent price manipulation or fraud. In recent years, however, there has been a tremendous growth in the trading of contracts that look and are structured just like futures contracts, but which are traded on unregulated OTC electronic markets. Because of their similarity to futures contracts they are often called "futures look-alikes."

The only practical difference between futures look-alike contracts and futures contracts is that the look-alikes are traded in unregulated markets whereas futures are traded on regulated exchanges. The trading of energy commodities by large firms on OTC electronic exchanges was exempted from CFTC oversight by a provision inserted at the behest of Enron and other large energy traders into the Commodity Futures Modernization Act of 2000 in the waning hours of the 106th Congress.

The impact on market oversight has been substantial. NYMEX traders, for example, are required to keep records of all trades and report large trades to the CFTC. These Large Trader Reports, together with daily trading data providing price and volume information, are the CFTC's primary tools to gauge the extent of speculation in the markets and to detect, prevent, and prosecute price manipulation. CFTC Chairman Reuben Jeffrey recently stated: "The Commission's Large Trader information system is one of the cornerstones of our surveillance program and enables detection of concentrated and coordinated positions that might be used by one or more traders to attempt manipulation."

In contrast to trades conducted on the NYMEX, traders on unregulated OTC electronic exchanges are not required to keep records or file Large Trader Reports with the CFTC, and these trades are exempt from routine CFTC oversight. In contrast to trades conducted on regulated futures exchanges, there is no limit on the number of contracts a speculator may hold on an unregulated OTC electronic exchange, no monitoring of trading by the exchange itself, and no reporting of the amount of outstanding contracts ("open interest") at the end of each day."

Then, apparently to make sure the way was opened really wide to potential market oil price manipulation, in January 2006, the Bush Administration's CFTC permitted the Intercontinental Exchange (ICE), the leading operator of electronic energy exchanges, to use its trading terminals in the United States for the trading of US crude oil futures on the ICE futures exchange in London ­ called "ICE Futures."

Previously, the ICE Futures exchange in London had traded only in European energy commodities ­ Brent crude oil and United Kingdom natural gas. As a United Kingdom futures market, the ICE Futures exchange is regulated solely by the UK Financial Services Authority. In 1999, the London exchange obtained the CFTC's permission to install computer terminals in the United States to permit traders in New York and other US cities to trade European energy commodities through the ICE exchange.

The CFTC opens the door

Then, in January 2006, ICE Futures in London began trading a futures contract for

West Texas Intermediate (WTI) crude oil, a type of crude oil that is produced and delivered in the United States. ICE Futures also notified the CFTC that it would be permitting traders in the United States to use ICE terminals in the United States to trade its new WTI contract on the ICE Futures London exchange. ICE Futures as well allowed traders in the United States to trade US gasoline and heating oil futures on the ICE Futures exchange in London.

Despite the use by US traders of trading terminals within the United States to trade US oil, gasoline, and heating oil futures contracts, the CFTC has until today refused to assert any jurisdiction over the trading of these contracts.

Persons within the United States seeking to trade key US energy commodities ­ US crude oil, gasoline, and heating oil futures ­ are able to avoid all US market oversight or reporting requirements by routing their trades through the ICE Futures exchange in London instead of the NYMEX in New York.

Is that not elegant? The US Government energy futures regulator, CFTC opened the way to the present unregulated and highly opaque oil futures speculation. It may just be coincidence that the present CEO of NYMEX, James Newsome, who also sits on the Dubai Exchange, is a former chairman of the US CFTC. In Washington doors revolve quite smoothly between private and public posts.

A glance at the price for Brent and WTI futures prices since January 2006 indicates the remarkable correlation between skyrocketing oil prices and the unregulated trade in ICE oil futures in US markets. Keep in mind that ICE Futures in London is owned and controlled by a USA company based in Atlanta Georgia.

In January 2006 when the CFTC allowed the ICE Futures the gaping exception, oil prices were trading in the range of $59-60 a barrel. Today some two years later we see prices tapping $120 and trend upwards. This is not an OPEC problem, it is a US Government regulatory problem of malign neglect.

By not requiring the ICE to file daily reports of large trades of energy commodities, it is not able to detect and deter price manipulation. As the Senate report noted, "The CFTC's ability to detect and deter energy price manipulation is suffering from critical information gaps, because traders on OTC electronic exchanges and the London ICE Futures are currently exempt from CFTC reporting requirements. Large trader reporting is also essential to analyze the effect of speculation on energy prices."

The report added, "ICE's filings with the Securities and Exchange Commission and other evidence indicate that its over-the-counter electronic exchange performs a price discovery function -- and thereby affects US energy prices -- in the cash market for the energy commodities traded on that exchange."

Hedge Funds and Banks driving oil prices

In the most recent sustained run-up in energy prices, large financial institutions, hedge funds, pension funds, and other investors have been pouring billions of dollars into the energy commodities markets to try to take advantage of price changes or hedge against them. Most of this additional investment has not come from producers or consumers of these commodities, but from speculators seeking to take advantage of these price changes. The CFTC defines a speculator as a person who "does not produce or use the commodity, but risks his or her own capital trading futures in that commodity in hopes of making a profit on price changes."

The large purchases of crude oil futures contracts by speculators have, in effect, created an additional demand for oil, driving up the price of oil for future delivery in the same manner that additional demand for contracts for the delivery of a physical barrel today drives up the price for oil on the spot market. As far as the market is concerned, the demand for a barrel of oil that results from the purchase of a futures contract by a speculator is just as real as the demand for a barrel that results from the purchase of a futures contract by a refiner or other user of petroleum.

Perhaps 60% of oil prices today pure speculation

Goldman Sachs and Morgan Stanley today are the two leading energy trading firms in the United States. Citigroup and JP Morgan Chase are major players and fund numerous hedge funds as well who speculate.

In June 2006, oil traded in futures markets at some $60 a barrel and the Senate investigation estimated that some $25 of that was due to pure financial speculation. One analyst estimated in August 2005 that US oil inventory levels suggested WTI crude prices should be around $25 a barrel, and not $60.

That would mean today that at least $50 to $60 or more of today's $115 a barrel price is due to pure hedge fund and financial institution speculation. However, given the unchanged equilibrium in global oil supply and demand over recent months amid the explosive rise in oil futures prices traded on Nymex and ICE exchanges in New York and London it is more likely that as much as 60% of the today oil price is pure speculation. No one knows officially except the tiny handful of energy trading banks in New York and London and they certainly aren't talking.

By purchasing large numbers of futures contracts, and thereby pushing up futures prices to even higher levels than current prices, speculators have provided a financial incentive for oil companies to buy even more oil and place it in storage. A refiner will purchase extra oil today, even if it costs $115 per barrel, if the futures price is even higher.

As a result, over the past two years crude oil inventories have been steadily growing, resulting in US crude oil inventories that are now higher than at any time in the previous eight years. The large influx of speculative investment into oil futures has led to a situation where we have both high supplies of crude oil and high crude oil prices.

Compelling evidence also suggests that the oft-cited geopolitical, economic, and natural factors do not explain the recent rise in energy prices can be seen in the actual data on crude oil supply and demand. Although demand has significantly increased over the past few years, so have supplies.

Over the past couple of years global crude oil production has increased along with the increases in demand; in fact, during this period global supplies have exceeded demand, according to the US Department of Energy. The US Department of Energy's Energy Information Administration (EIA) recently forecast that in the next few years global surplus production capacity will continue to grow to between 3 and 5 million barrels per day by 2010, thereby "substantially thickening the surplus capacity cushion."

Dollar and oil link

A common speculation strategy amid a declining USA economy and a falling US dollar is for speculators and ordinary investment funds desperate for more profitable investments amid the US securitization disaster, to take futures positions selling the dollar "short" and oil "long."

For huge US or EU pension funds or banks desperate to get profits following the collapse in earnings since August 2007 and the US real estate crisis, oil is one of the best ways to get huge speculative gains. The backdrop that supports the current oil price bubble is continued unrest in the Middle East, in Sudan, in Venezuela and Pakistan and firm oil demand in China and most of the world outside the US. Speculators trade on rumor, not fact.

In turn, once major oil companies and refiners in North America and EU countries begin to hoard oil, supplies appear even tighter lending background support to present prices.

Because the over-the-counter (OTC) and London ICE Futures energy markets are unregulated, there are no precise or reliable figures as to the total dollar value of recent spending on investments in energy commodities, but the estimates are consistently in the range of tens of billions of dollars.

The increased speculative interest in commodities is also seen in the increasing popularity of commodity index funds, which are funds whose price is tied to the price of a basket of various commodity futures. Goldman Sachs estimates that pension funds and mutual funds have invested a total of approximately $85 billion in commodity index funds, and that investments in its own index, the Goldman Sachs Commodity Index (GSCI), has tripled over the past few years. Notable is the fact that the US Treasury Secretary, Henry Paulson, is former Chairman of Goldman Sachs.

F. William Engdahl is an Associate of the Centre for Research on Globalization (CRG) and author of A Century of War: Anglo-American Oil Politics and the New World Order. He may be contacted at

1 United States Senate Premanent Subcommittee on Investigations, 109th Congress 2nd Session, The Role of Market speculation in Rising Oil and Gas Prices: A Need to Put the Cop Back on the Beat; Staff Report, prepared by the Permanent Subcommittee on Investigations of the Committee on Homeland Security and Governmental Affairs, United States Senate, Washington D.C., June 27, 2006. p. 3.

How business starves the world’s poor

Joanna Blythman on the food crisis

THE SUMS just don't add up. There's a world food supply crisis, the cost of a basket of groceries has shot up by between 10% and 12.5%, yet our supermarkets are recording healthy profits - Tesco's profits last year, for instance, showed a 11.8% rise.

Meanwhile, farmers - the people who produce our food, say that they are being paid less than they were years ago. Many are selling meat and milk at below the cost of production. Their situation is pretty desperate. It's no coincidence the homepages of farming websites flag up the 24-hour helpline numbers for the Samaritans and the Farm Crisis Network. Suicide among farmers is at record rates.

When pressed by John Humphrys on the Today programme about what the government was doing to control soaring retail food prices, deputy prime minister Harriet Harman said that she "expects the supermarkets to play their part". Ominous words. Farmers will wince, because they understand the sub-text.

Subsequent administrations have given the nod to supermarkets to squeeze farmers on price in order to keep food inflation down and that pressure can only get worse. Asda Wal-Mart CEO, Andy Bond, recently said he intends to be "assertive" and "aggressive" with suppliers. Go right ahead Andy, but there won't be many farmers left.

So there's the mental arithmetic problem. If the farmer gets less, the consumer pays more and the supermarket makes more, where's all the profit in the food chain going?

An interesting insight into this murky maths was provided this week by EU agriculture commissioner, Mariann Fischer Boel. She says that only about two-thirds of the rise in food prices we have seen in Europe can be attributed to increases in the cost of ingredients. "Energy, transport and labour costs have risen, but it is possible that somewhere along the food chain someone may be doing well out of this," she adds

She has released figures showing that the cost of many grocery staples has gone up by more than the value of basic commodities used to make them. Bread, for example, increased 10% between February 2007 and 2008, but the near-doubling of the price of wheat should have led to only a 3% rise.

It seems our retailers are doing very nicely out of the global food crisis, thank you very much, and so are the global agri-business firms, traders and speculators currently raking in fabulous profits. Hungry people are out on the streets from Egypt to Haiti to protest at the rocketing cost of staples, yet Cargill, the world's biggest grain trader, has achieved an 86% increase in profits from commodity trading in the first quarter of this year alone. Meanwhile Bunge, another huge food trader, reported a 77% increase in profits during the last quarter of last year. ADM, the second largest grain trader in the world, registered a 67% increase in profits in 2007.

Farmers the world over yearn for stable, reliable prices for the food they produce. But stock market traders? My, how they love volatility. Buying and selling? It's how they make their money. That's why investment funds, escaping from sliding stock markets and the credit crunch, are having a bonanza on the commodity markets.

But while they have elevated food speculation to an art form, they are driving food out of reach of poor countries like Bangladesh, Cameroon and the Philippines.

In rich countries like ours, the rising cost of food is not yet critical. Certainly, our poorest citizens already feel the pinch. You can turn off the heater but you still have to eat, and a 60% increase in the cost of a bag of pasta is significant. But the worse scenario for most affluent people is hardly grave - less to spend on a handbag or new trainers, perhaps.

However, globally, the situation is acute. A new UN taskforce now warns that we face "an unprecedented challenge of global proportions that has become a crisis for the world's most vulnerable".

Head of the taskforce Sir John Holmes, has likened it to "a silent, rolling tsunami", more insidious even than the classic famines we have seen in countries such as Ethiopia. The UN World Food Programme estimates that recent food price rises mean an additional 100 million people can no longer afford to eat adequately.

The IMF and the World Bank pushed countries to dismantle all forms of protection for their local farmers and to open up their markets to global agribusiness and subsidised food from rich countries. Like chiselling snake oil salesmen, they said that a liberalised market would provide the most efficient system for producing and distributing food.

Some 70% of developing countries listened to them and changed from exporters of food into importers. Now they can't afford to buy food because traders' asking prices are too high.

Harvests blighted by climate change, combined with a soaring global population, make it ever harder for the planet to feed itself.

But when food is no longer just something that nourishes people and provides them with secure livelihoods, and becomes a commodity for corporate speculation and bargaining, then that task becomes impossible. ... s_poor.php


Postby Raju » 07 May 2008 07:59

Multinationals make billions in profit out of growing global food crisis

Speculators blamed for driving up price of basic foods as 100 million face severe hunger

By Geoffrey Lean, Environment Editor
Sunday, 4 May 2008

Giant agribusinesses are enjoying soaring earnings and profits out of the world food crisis which is driving millions of people towards starvation, The Independent on Sunday can reveal. And speculation is helping to drive the prices of basic foodstuffs out of the reach of the hungry.

The prices of wheat, corn and rice have soared over the past year driving the world's poor – who already spend about 80 per cent of their income on food – into hunger and destitution.

The World Bank says that 100 million more people are facing severe hunger. Yet some of the world's richest food companies are making record profits. Monsanto last month reported that its net income for the three months up to the end of February this year had more than doubled over the same period in 2007, from $543m (£275m) to $1.12bn. Its profits increased from $1.44bn to $2.22bn.

Cargill's net earnings soared by 86 per cent from $553m to $1.030bn over the same three months. And Archer Daniels Midland, one of the world's largest agricultural processors of soy, corn and wheat, increased its net earnings by 42 per cent in the first three months of this year from $363m to $517m. The operating profit of its grains merchandising and handling operations jumped 16-fold from $21m to $341m.

Similarly, the Mosaic Company, one of the world's largest fertiliser companies, saw its income for the three months ending 29 February rise more than 12-fold, from $42.2m to $520.8m, on the back of a shortage of fertiliser. The prices of some kinds of fertiliser have more than tripled over the past year as demand has outstripped supply. As a result, plans to increase harvests in developing countries have been hit hard.

The Food and Agriculture Organisation reports that 37 developing countries are in urgent need of food. And food riots are breaking out across the globe from Bangladesh to Burkina Faso, from China to Cameroon, and from Uzbekistan to the United Arab Emirates.

Benedict Southworth, director of the World Development Movement, called the escalating earnings and profits "immoral" late last week. He said that the benefits of the food price increases were being kept by the big companies, and were not finding their way down to farmers in the developing world.

The soaring prices of food and fertilisers mainly come from increased demand. This has partly been caused by the boom in biofuels, which require vast amounts of grain, but even more by increasing appetites for meat, especially in India and China; producing 1lb of beef in a feedlot, for example, takes 7lbs of grain.

World food stocks at record lows, export bans and a drought in Australia have contributed to the crisis, but experts are also fingering food speculation. Professor Bob Watson – chief scientist at the Department for Environment, Food and Rural Affairs, who led the giant International Assessment of Agricultural Science and Technology for Development – last week identified it as a factor.

Index-fund investment in grain and meat has increased almost fivefold to over $47bn in the past year, concludes AgResource Co, a Chicago-based research firm. And the official US Commodity Futures Trading Commission held special hearings in Washington two weeks ago to examine how much speculators were helping to push up food prices.

Cargill says that its results "reflect the cumulative effect of having invested more than $18bn in fixed and working capital over the past seven years to expand our physical facilities, service capabilities, and knowledge around the world".

The revelations are bound to increase outrage over multinational companies following last week's disclosure that Shell and BP between them recorded profits of £14bn in the first three months of the year – or £3m an hour – on the back of rising oil prices. Shell promptly attracted even greater condemnation by announcing that it was pulling out of plans to build the world's biggest wind farm off the Kent coast.

World leaders are to meet next month at a special summit on the food crisis, and it will be high on the agenda of the G8 summit of the world's richest countries in Hokkaido, Japan, in July.

Additional research by Vandna Synghal

Independent, UK
Last edited by Raju on 07 May 2008 08:40, edited 1 time in total.

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Postby Nayak » 07 May 2008 08:14

Hey encode your URL, you are $crewing up the formatting of the page.


Postby Raju » 07 May 2008 08:24

Asian nations agree to set up crisis fund
2 days ago

MADRID (AFP) — Finance ministers of 13 Asian nations agreed here on Sunday to set up a foreign exchange pool of at least 80 billion dollars (52 billion euros) to be used in the event of another regional financial crisis.

China, Japan and South Korea will provide 80 percent of the funds, with the rest coming from the 10 members of ASEAN, they said in a joint statement issued after talks on the sidelines of an Asian Development Bank meeting in Madrid.

The 13 nations agreed after the 1997-98 Asian financial crisis to set up a mainly bilateral currency swap scheme known as the Chiang Mai Initiative (CMI) to protect their currencies from turmoil in the future.

At the ADB's last annual meeting in Japan in May 2007, they decided to set aside part of their foreign reserves for a multi-nation system of reserves for use in emergencies, but did not decide on the size of the pool.

"We are committed to further accelerate our work in order to reach consensus on all of the elements which include concrete conditions eligible for borrowing and contents of convenants specified in borrowing arrangements," the statement said.

The foreign exchange pool would be self-managed and be governed by a single contract that will be legally binding, it added.

Vietnam's Finance Minister Vu Van Ninh, who co-chaired the Madrid meeting, said the 13 nations would now work to develop a way of monitoring the fund.

"We think it is very important to have a rigorous surveillance system, especially in the context that regional economies have made an important and big integration into the world economy," he told reporters.

Japanese Finance Minister Fukushiro Nukaga, the other meeting co-chair, did not give a timeline for the the creation of the fund when asked, saying only that it "should be achievable in terms of its objectives."

The creation of the pool is a big step towards the creation af an Asian equivalent of the Washington-based International Monetary Fund (IMF).

During the 1997-1998 Asian financial crisis Indonesia, Thailand and South Korea had to borrow heavily from the IMF to boost their finances as investors sold their currencies.

The IMF forced the governments of the three nations to make unpopular spending cuts, sell state-owned firms and raise interest rates in exchange for the loans of over 100 billion dollars.

Asian economies are being challenged by rising energy and commodity prices as well as the vulnerability of financial markets, the finance ministers said in the statement.

"The regional economy has continued its strong growth and is forecast to remain robust although somewhat weaker," it said.

"We confirmed the importance of taking appropriate actions to ensure that economic activity continues at a sustained pace by balancing policies to deal with these risks," it added.

The ADB predicts Asia's developing economies will expand by 7.6 percent in 2008, its lowest level in five years, after surging ahead 8.7 percent last year.

Inflation in the region should hit 5.1 percent this year, its highest level since the 1997-1998 financial crisis.

The 13 countries are China, Japan, South Korea and the Association of Southeast Asian Nations (ASEAN), made up of Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam. ... DXtHoFuWnA


Postby Raju » 07 May 2008 11:49

the superclass

Speaker: David Rothkopf
Carnegie Endowment for Peace

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Postby Nayak » 07 May 2008 12:34

EU flays India, China for food crisis

Brussels: The European Union on Tuesday joined the debate on the reason for spiralling food prices worldwide, saying India and China were consuming more meat which was driving global food prices up.

EU Commissioner for Agriculture and Rural Development Mariann Fischer Boel said here on Tuesday that the change of dietary habits in China and India and bad weather are driving food prices high worldwide, reported EuAsiaNews.

"Those who see biofuels as the driving force behind recent food price increases have overlooked not just one elephant standing right in front of them, but two," she said in a speech at the European Policy Centre, a think-tank in Brussels.

"The first elephant is the huge increase in demand from emerging countries like China and India. These countries are eating more meat. It takes about 4 kg of cereals to produce one kg of pork, and about two kg of cereals to make one kg of poultry meat. So a dietary shift towards meat in countries with populations of over 1 billion people each has an enormous impact on commodity markets," noted the Danish commissioner.

The second elephant is the weather, and its effect on production, said Boel. In 2006, bad weather hit cereal production in the US, the European Union, Canada, Russia, Ukraine and Australia. In 2007, the same thing happened again, except in the US. "This is not a recipe for low prices," she said.

"However, long-term price rises are not an entirely bad thing. They could be good news for the 70 to 80 per cent of the world's poorest who live in rural areas and depend on farming for their livelihood. Here, we can do much better with our development aid," she added.

Meanwhile, Jeffrey Sachs, special adviser to UN Secretary-General Ban Ki-moon, said the current policy of promoting bio-fuels must be rethought.

These programmes were "understandable at a time when food prices were lower but not any more," he told a meeting of the European Parliament's Development Committee on Monday.

He noted that a third of the US maize crop in 2008 would be used to fill petrol tanks.

Sachs also criticised the World Bank for encouraging developing countries to focus on export goods, thus neglecting agriculture and starting to import most of their food.

The European Parliament is due to adopt a resolution on rising food prices at its plenary session on May 22.

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Postby Ardeshir » 08 May 2008 19:00

Has anyone noticed the number of desi reporters on Bloomberg?
I counted about 4 of them, and remember the names of atleast 2. Maithreyi Seetharaman, and the other called Naga ( :lol: ).

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Postby Singha » 08 May 2008 19:19

how about someone telling the flatulent and fat americans and euros to eat _less_ meat than us eating less than the paltry bones we get to chew on.

they seem think its their divine birthright to consume all the worlds resources
but wag their fingers when others want to become less sdre.

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Postby Kakkaji » 08 May 2008 19:31

China farming the world to feed its economy

Critics cite strong-arm tactics forcing neighboring nations to grow crops

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Postby Singha » 08 May 2008 22:56


Who Will Tell the People?

Published: May 4, 2008

Traveling the country these past five months while writing a book, I’ve had my own opportunity to take the pulse, far from the campaign crowds. My own totally unscientific polling has left me feeling that if there is one overwhelming hunger in our country today it’s this: People want to do nation-building. They really do. But they want to do nation-building in America.

They are not only tired of nation-building in Iraq and in Afghanistan, with so little to show for it. They sense something deeper — that we’re just not that strong anymore. We’re borrowing money to shore up our banks from city-states called Dubai and Singapore. Our generals regularly tell us that Iran is subverting our efforts in Iraq, but they do nothing about it because we have no leverage — as long as our forces are pinned down in Baghdad and our economy is pinned to Middle East oil.

Our president’s latest energy initiative was to go to Saudi Arabia and beg King Abdullah to give us a little relief on gasoline prices. I guess there was some justice in that. When you, the president, after 9/11, tell the country to go shopping instead of buckling down to break our addiction to oil, it ends with you, the president, shopping the world for discount gasoline.
We are not as powerful as we used to be because over the past three decades, the Asian values of our parents’ generation — work hard, study, save, invest, live within your means — have given way to subprime values: “You can have the American dream — a house — with no money down and no payments for two years.â€

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Postby bala » 09 May 2008 04:39

If Britain wastes this much food, US and Europe combined must be several orders of magnitude away..

Britons food waste costs a fortune

The amount of good food Britons throw away unnecessarily is at record levels, according to a study on Thursday, costing the economy 10 billion pounds a year.

They calculated that stopping good food waste could reduce annual carbon dioxide emissions by 18 million tonnes. This was same effect as taking one in five cars off British roads, it added.

Meanwhile India is the greenest consumer...

Indians are world's greenest consumers

Indian and Brazilian consumers care the most for their environment in their day-to-day behaviour while consumers in the US care the least, a study of 14 countries conducted by National Geographic and GlobeScan has revealed.

There goes the boast of G. W. Bush and Condi Rice.

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Postby SwamyG » 09 May 2008 21:57

Is ExxonMobil's future running dry?
Pretty soon aam amirkhans will start demanding that drilling be allowed in ANWR.

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Postby SwamyG » 09 May 2008 22:09

bala wrote:
Meanwhile India is the greenest consumer...

Indian and Brazilian consumers care the most for their environment in their day-to-day behaviour while consumers in the US care the least, a study of 14 countries conducted by National Geographic and GlobeScan has revealed.

I always thought and think our dharmic non-western life is the best suited for this planet. :twisted:

I cringed when shops and vendors started doling out produce and things in plastic bags. The old fashioned way of bundling things in old newspaper with jute thread to keep it well formed was an art as well as the best dharmic local recycling enterprise.

Ladies never threw the old clothes, they gave it to the vendor who traversed the street who exchanged it for "ever silver" vessels. The "negotiations" were interesting and annoying at some times.

Ever seen how elders shopped for vegetables at the market! They took few cloth bags. Bought all vegetables and dumped into the bags. And back home the family separated the chillies from the green beans from carrots from chow-chow. No wastage, and great family time :-)

Have we seen how elders shopped at the ration shop? Again it was jute an d clothe bags onlee.

Ever looked into kitchen cupboards? Yes the condiments, pulses etc were stored in old Horlicks, Bournvita or Dala bottles and cans. They got thrown out only when they broke or rusted beyond imagination.

Did we throw books, magazines and newspapers into recycling bins? Naah, we took it to the shop that weighed them and gave us money back. Sometimes these were the pocket money for the youngsters. {Whenever we had to do this, I used to sit and pour through Sports Star to salvage some of the glossiest and best photographs available to me}

It is natural that when resources and income are limited, humans tend to conserve and get the best use of what ever is available.

"Vast Prosperity" has upset that balance in the recent decades.

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Postby Nayak » 10 May 2008 17:39

Citigroup Announces Plan To Shed $400 Billion in Assets

By Tomoeh Murakami Tse
Washington Post Staff Writer
Saturday, May 10, 2008; Page D01

NEW YORK, May 9 -- Citigroup said Friday it would shed about $400 billion in real estate, loans and other assets over the next few years as it tries to return to profitability after huge losses in the mortgage and credit markets.

The banking giant, which has been divesting its businesses and raising billions of dollars of capital in recent months, also said that it aims to increase revenue by 9 percent annually and produce annual earnings of at least $20 billion.

The targets were revealed by Vikram Pandit, Citigroup's new chief executive, and his senior staff members during a much-anticipated presentation to investors and analysts in Midtown Manhattan.

Pandit, installed five months ago after his predecessor, Charles Prince, was forced to resign in the face of multibillion-dollar write-downs on the value of risky assets on Citi's books, has faced growing pressure from investors. Many have clamored for Pandit to slash costs and boost share prices, which have fallen by more than half in the past year. Some investors, frustrated with the pace of change, have called for drastic measures, such as a breakup of Citigroup's key businesses.

During the four-hour presentation and question-and-answer session, Pandit made clear that the company would focus on returns, managing risks, increasing efficiency across its businesses and restructuring Citi to tap the full potential of the bank's extensive global operations. He called for patience, telling the audience of about 250 that "this will take some time."

Afterward, some investors, while cautious about Citigroup's ability to meet its goals in a tough market environment, said they were encouraged by the bank's pledge to trim its balance sheet and control costs. "I feel comfortable in that management was on the offense rather than back on their heels. They looked confident," said Anton Schutz, president of Mendon Capital Advisors, who has been buying shares of Citigroup in recent months. "Now the proof is in the execution."

Citigroup said it has about $500 billion of what are called "legacy" assets, which it hopes to reduce to less than $100 billion within two to three years as the assets are sold or reach maturity. The $500 billion figure represents about a fifth of Citigroup's assets. Citigroup is the largest U.S. bank by assets. which totaled $2.2 trillion at the end of the first quarter.

Of the $500 billion, 35 percent is in real estate, 11 percent in high-risk securities called structured investment vehicles and 6 percent in highly leveraged commitments, Citigroup said. An additional 5 percent is in subprime collateralized debt obligations, complicated securities that have been the cause of much of the bank's $40 billion in write-downs. Four percent is in auto loans. Citigroup did not identify the remaining 39 percent.

"Their balance sheet had grown quite a bit . . . almost as if it was out of control," said Bert Ely, a banking consultant in Alexandria. The reduction "is the kind of move they need to be making as part of the turnaround effort."

Pandit on Friday outlined a three-step plan for Citigroup to "get fit," "restructure" and "maximize" its business. Since taking over, he has been working to implement the first phase of the plan, including slashing costs -- 13,200 job cuts have been announced this year -- and divesting such non-core businesses as Diners Club, CitiStreet and CitiCapital.

While Citigroup executives said they would continue to divest businesses, some investors have been pushing for a more radical slicing up of the company. At the Friday meeting, Pandit made clear he is committed to keeping the company intact while focusing his attention on businesses and emerging regions with the greatest growth potential.

"We believe the right model is a global universal bank," Pandit said. "This is the model that delivers the most shareholder value. And it's fundamentally different than a conglomerate or a financial supermarket. We are neither."

Citigroup shares slid 2.8 percent, closing at $23.63.

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Postby Nayak » 22 May 2008 08:34

More Questions Are Raised About Moody’s Ratings

Published: May 22, 2008

The Moody’s Corporation is investigating whether it assigned top-flight credit ratings to certain securities because of computer errors, the company said Wednesday, raising new questions about the credibility of its assessments.

News that Moody’s might have made such mistakes emboldened the company’s many critics and sent its stock price tumbling. Its shares closed down 15.9 percent, to $36.91, their biggest one-day decline in almost a decade.

The attorney general of Connecticut, Richard Blumenthal, who has criticized the practices of Moody’s and other ratings firms, said that he was investigating how Moody’s had dealt with the possible errors in its computer models.

“One of the areas that most concerns us is the potential favoritism and abusive and illegal practices that involve dealings with the companies that they rate,â€

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Postby Nayak » 22 May 2008 09:34

Imbalances of Power

Published: May 21, 2008

There has been much debate in this campaign about which of our enemies the next U.S. president should deign to talk to. The real story, the next president may discover, though, is how few countries are waiting around for us to call. It is hard to remember a time when more shifts in the global balance of power are happening at once — with so few in America’s favor.
Skip to next paragraph
Fred R. Conrad/The New York Times

Thomas L. Friedman
Go to Columnist Page »

Let’s start with the most profound one: More and more, I am convinced that the big foreign policy failure that will be pinned on this administration is not the failure to make Iraq work, as devastating as that has been. It will be one with much broader balance-of-power implications — the failure after 9/11 to put in place an effective energy policy.

It baffles me that President Bush would rather go to Saudi Arabia twice in four months and beg the Saudi king for an oil price break than ask the American people to drive 55 miles an hour, buy more fuel-efficient cars or accept a carbon tax or gasoline tax that might actually help free us from what he called our “addiction to oil.â€

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Postby Paul » 22 May 2008 23:51

A review of Rothkopf's book "SuperClass" has been posted in the Book review folder.

To be within shouting distance of this class in the US, you have earn approx $380K which is the top 1% earning bracket here.

Laksman Achutanan of ECRI was on CNBC Squackbox this morning. He thinks we are in the early stages of a severe recession in the US. IMO his opinion should be taken seriously, as he is a class apart from the run of mill lifafa wall street economists.

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Postby paramu » 23 May 2008 01:47

Gurus, is the so called recession a modern day (or industrialization) phenomenon? I don't remember reading recession described in any old stories. Is this engineered to meet any political/geopolitical/economic goals?

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Postby svinayak » 23 May 2008 10:14

Paul wrote:
Laksman Achutanan of ECRI was on CNBC Squackbox this morning. He thinks we are in the early stages of a severe recession in the US. IMO his opinion should be taken seriously, as he is a class apart from the run of mill lifafa wall street economists.

read up history between 1920 - 1935

The United States could have named the terms on which it would have supplied the
world with dollars to enable foreign countries to repay their war debts. It could have
specified what imports it wanted or was willing to take. But it did not ask or even permit
debtor countries to pay their debts in the form of exports to the United States. Its investors
could have named the foreign assets they wanted to buy, but private investors were
overshadowed by intergovernmental financial agreements, or the lack of same, enforced
by the U.S. Government. On both the trade and financial fronts the U.S. Government
pursued policies that impelled European countries to withdraw from the world economy
and turn within.
Even America’s attempt to ameliorate matters backfired. To make it easier for the
Bank of England to pay its war debts to the United States, the Federal Reserve held down
interest rates so as not to draw money away from Britain. But low interest rates spurred a
stock market boom, discouraging U.S. capital outflows into European financial markets.
America’s failure to recycle the proceeds of its intergovernmental debt receipts into
the purchase of European exports and assets was a failure to perceive the implicit strategy
dictated by its unique position as world creditor. European diplomats spelled out the
required strategy clearly enough in the 1920s, but the U.S. Government’s economic
isolationism precluded it from collecting its intergovernmental debts. Its status as world
creditor proved ultimately worthless as the world economy broke into nationalist units,
each striving to become independent of foreign trade and payments, and from the U.S.
economy in particular. In this respect America forced its own inward-looking attitude on
other nations.
The upshot was the breakdown of world payments, competitive devaluations, tariff
wars and international autarchy that characterized the 1930s. This state of affairs was less
an explicit attempt at imperialism than an inept result of narrowly legalistic and
bureaucratic intransigence regarding the war debts, coupled with a parochial domestic
tariff policy. It was just the opposite of a policy designed to establish the United States as
the world’s economic center based on a reciprocity of payments between creditor and
periphery, a complementarity of imports and exports, production and payments. A viable
American-centered world economic system would have required some means of enabling
Europe to repay its war debts. What occurred instead was American isolationism at home,
prompting drives for national self-sufficiency abroad.
One can find cases throughout history in which seemingly logical paths of least
resistance have not been followed. In most such cases the explanation is to be found in
leadership looking backward rather than forward, or to narrow rather than broad economic
and social interests. Although it certainly was logical in the 1920s for private U.S. investors
to extend their power throughout the world, the financial policies pursued by the U.S.
Government (and to a lesser extent by other governments) made this impossible. The
Government narrowly construed America’s national self-interest in terms of the Treasury’s
balance sheet, putting this above the cosmopolitan tendencies of private financial capital.
This forced country after country to withdraw from the internationalism of the gold exchange
standard, and to abandon policies of currency stability and free trade.

Last edited by svinayak on 26 May 2008 05:02, edited 1 time in total.

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Postby Singha » 25 May 2008 23:35


Buffett sees "long, deep" U.S. recession

Saturday May 24, 7:30 am ET

BERLIN (Reuters) - The United States is already in a recession and it will be longer as well as deeper than many people expect, U.S. investor Warren Buffett said in an interview published in German magazine Der Spiegel on Saturday.

He said the United States was "already in recession" and added: "Perhaps not in the sense that economists would define it" with two consecutive quarters of negative growth.

"But the people are already feeling the effects," said Buffett, the world's richest man. "It will be deeper and last longer than many think."

But he said that won't stop him from investing in selected companies and said he remained interested in well-managed German family-owned companies.

"If the world were falling apart I'd still invest in companies," he said.

Buffett also renewed his criticism of derivatives trading.

"It's not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets even though the sectors are actually in good health."

Buffett complained about the lack of effective controls.

"That's the problem," he said. "You can't steer it, you can't regulate it anymore. You can't get the genie back in the bottle."

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Postby svinayak » 26 May 2008 04:36

Superimperialism: The Economic Strategy of American Empire (pdf)

The early 21st century is witnessing the emergence of a new kind of centralized
global planning. It is not by governments generally, as anticipated in the aftermath of
World War II, but is mainly by the U.S. Government. Its focus and control mechanisms
are financial, not industrial. Unlike the International Trade Organization envisioned in the
closing days of World War II, today’s WTO is promoting the interests of financial investors
in ways that transfer foreign gains from trade to the United States, not uplift world labor.

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Postby Nayak » 26 May 2008 08:00

News ticker at bloomberg was screaming that we are looking at 140$ a barrel.

:shock: :shock: :shock:

Amreekhans will be paying $7 a gallon. The bite on the wallet is going to get more painful as the days go by.

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Postby Singha » 26 May 2008 08:03

gas is supposedly $8/gal in Germany...typically 2x the US price in the
leading welfare states of EU for quite some time now.
they get away with it due to compact nature of their cities , buses. metros,
railways and small nations in general.

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Postby Surya » 26 May 2008 08:14

err - the repercussions are going to be for everyone

how long do you think the GOI will continue to absorb the losses and subsidize oil?

The losses would mean something else is going to get cut

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Postby Nayak » 26 May 2008 09:17

USA Today: Debt-squeezed Gen X Saves Little

* For years, experts have warned that too many of the USA's 79 million baby boomers aren't financially ready for their coming retirements. Yet, if the boomers have had it hard, it's nothing compared with those next in line: Generation X
* Generation X now 27 to 43 years old — have even less assurance than the boomers of receiving company pensions and projected Social Security benefits.
* In 1979, when the oldest Gen Xers were teenagers, the sole retirement plan for 62% of workers was a traditional pension, according to the Employee Benefit Research Institute (EBRI). By 2005, when most of the Gen Xers had joined the workforce, that number had flipped: 63% of employees found themselves covered only by voluntary 401(k) plans. So much for the corporate safety net.
* Yet, burdened by high housing costs, stifling college debt, stagnating wages and outsize health insurance and gas prices, Gen Xers are saving too little for retirement, just as workplace benefits have shrunk.
* More than one in three workers ages 35 to 44 aren't setting aside any money for retirement. Among those ages 25 to 34, 45% aren't saving.
* Nine out of 10 consumers in their 30s are in debt.
* Gen Xers also are the first generation to graduate from college with significant student loan debt. About 20% of adults in their 30s are still paying college loans, according to the Federal Reserve study; the median balance exceeds $13,000
* Gen Xers also face this harsh reality: The standard of living that most of them have so far managed to achieve falls short of their own parents' standard at the same age. The median income for men now in their 30s, when adjusted for inflation, is 12% lower than what their dads earned three decades earlier. (just a depressing fact and I believe this will ACCELERATE as the globe becomes even more flat, and we move closer to global wage arbitrage)
* From 1974, when many Gen Xers were children, until 2004, when most were in the workforce, family income rose only 9%. And most of that gain came from 1964 to 1994
* Gen Xers also had the unfortunate timing of becoming adults in a period when the share of income that Americans spend on what most people see as essential needs, such as a home, health insurance and cars, has soared.
* Schwab found that Gen Xers often don't understand investment basics. Many, for instance, don't realize that an investor can contribute to both a 401(k) plan and an IRA. This might help explain why 82% of Gen Xers have no IRA, according to a Schwab survey.
* Some specialists suggest that Gen Xers, faced with escalating financial obligations and shakier job situations, have developed a wary, skeptical stance toward the corporate world.

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Postby Nayak » 26 May 2008 09:19

Truck and SUV Sales Continue to Drop

By KSPR News

Story Created: May 26, 2008

Story Updated: May 26, 2008
The sales of trucks and SUV’s continue plummet with gas prices soaring towards four dollars.
According to an AP report, national truck and SUV sales for General Motors were down 27 percent compared to a year ago.
Ford and Chrysler reported similar drops.

“We got asked about horse power in the past and that's rarely asked about now,â€

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Postby Surya » 27 May 2008 18:35

For those who are merry at $8 a gallon oil in States - we have big problems too

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Postby svinayak » 01 Jun 2008 00:35

Saudis say dollar peg beneficial, to continue: reports
By Wallace Witkowski, MarketWatch
Last update: 2:16 p.m. EDT May 31, 2008

SAN FRANCISCO (MarketWatch) -- Saudi Arabia will continue to peg its currency to the U.S. dollar citing benefits from the arrangement, according to media reports Saturday.
"As we have said many times, we have no intention of de-pegging or of revaluation," Saudi Arabian Finance Minister Ibrahim al-Assaf was quoted as saying.
U.S. Treasury Secretary Henry Paulson and al-Assaf met Saturday during Paulson's visit to the Gulf region and said in a joint statement that Saudi Arabia profits from the peg.
"The dollar peg, I think, has served this country (Saudi Arabia) and this region well," Paulson was quoted as saying. End of Story
Wallace Witkowski is a MarketWatch news editor in San Francisco.

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