Global Economy
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vina
- BRF Oldie
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[quote]
June 1, 2008
It’s Not So Easy Being Less Rich
By CHRISTINE HAUGHNEY
NANCY CHEMTOB, a divorce lawyer in Manhattan, has found that her days have become crammed seeing clients, all worried about how an economic downturn will affect their marriages.
They seem to have nothing to fret about: their net worths range from $5 million to $1 billion. A blip in the markets shouldn’t send their chateau-size Park Avenue co-ops to foreclosure or exile them to Payless Shoes.
But Ms. Chemtob’s clients are concerned all the same, she said, because their incomes have shrunk, say, to $2 million a year from $8 million, and they know that their 2008 bonus checks are likely to be much less impressive.
One of her clients recently confessed that his net worth had decreased to $8 million from more than $20 million, and he thinks that his wife will leave him. He has hidden their fall in fortune by taking on debt to pay for her extravagant clothes and vacations.
“I literally had to sit there and tell him that he had to tell his wife that she had to stop spending,â€
June 1, 2008
It’s Not So Easy Being Less Rich
By CHRISTINE HAUGHNEY
NANCY CHEMTOB, a divorce lawyer in Manhattan, has found that her days have become crammed seeing clients, all worried about how an economic downturn will affect their marriages.
They seem to have nothing to fret about: their net worths range from $5 million to $1 billion. A blip in the markets shouldn’t send their chateau-size Park Avenue co-ops to foreclosure or exile them to Payless Shoes.
But Ms. Chemtob’s clients are concerned all the same, she said, because their incomes have shrunk, say, to $2 million a year from $8 million, and they know that their 2008 bonus checks are likely to be much less impressive.
One of her clients recently confessed that his net worth had decreased to $8 million from more than $20 million, and he thinks that his wife will leave him. He has hidden their fall in fortune by taking on debt to pay for her extravagant clothes and vacations.
“I literally had to sit there and tell him that he had to tell his wife that she had to stop spending,â€
NYT
Op-Ed Columnist
The World Is Upside Down
For a while the world was flat. Now it’s upside down.
To understand it, invert your thinking. See the developed world as depending on the developing world, rather than the other way round. Understand that two-thirds of global economic growth last year came from emerging countries, whose economies will expand about 6.7 percent in 2008, against 1.3 percent for the United States, Japan and euro zone states.
The sharp rise in prices for energy, commodities, metals and minerals produced mainly in the developing world explains part of this shift. That has created the balance of payments surpluses fueling dollar-dripping sovereign wealth funds in the gulf and East Asia. They amuse themselves picking up a stake in BP here, a chunk of Morgan Stanley there, and why not a sliver of Total.
We of the developed-world Paleolithic species are fair game for the upstarts now, our predator role exhausted. The U.S. and Europe may one day need all the charity they can get.
To place this inversion in focus, it helps to be in Brazil, where winter (so to speak) arrives with the Northern Hemisphere summer, and economic optimism, as exuberant as the vegetation, increases at the same brisk clip as U.S. foreclosures.
Huge offshore oil finds, a sugarcane ethanol boom, vast reserves of unused arable land, mineral wealth and abundant fresh water contribute to Brazilian buoyancy. But natural resources are only part of the story. As in China and India, an expanding internal market is bolstering growth. So is increasing corporate sophistication and global ambition.
At the annual National Forum, a gathering of business leaders, I felt like a first-world pipsqueak as leaders of the national energy company Petrobras (bigger than BP, Shell and Total) and Companhia Vale do Rio Doce, or C.V.R.D. (the world’s second largest mining company), reeled off head-turning statistics.
Petrobras, which has spearheaded Brazil’s push to self-sufficiency from heavy dependence on imported oil 30 years ago, will more than double oil production to 4.2 million barrels a day in 2015 from 1.9 million barrels today.
“With the latest discoveries, the South Atlantic will become a huge oil producer,â€
Op-Ed Columnist
The World Is Upside Down
For a while the world was flat. Now it’s upside down.
To understand it, invert your thinking. See the developed world as depending on the developing world, rather than the other way round. Understand that two-thirds of global economic growth last year came from emerging countries, whose economies will expand about 6.7 percent in 2008, against 1.3 percent for the United States, Japan and euro zone states.
The sharp rise in prices for energy, commodities, metals and minerals produced mainly in the developing world explains part of this shift. That has created the balance of payments surpluses fueling dollar-dripping sovereign wealth funds in the gulf and East Asia. They amuse themselves picking up a stake in BP here, a chunk of Morgan Stanley there, and why not a sliver of Total.
We of the developed-world Paleolithic species are fair game for the upstarts now, our predator role exhausted. The U.S. and Europe may one day need all the charity they can get.
To place this inversion in focus, it helps to be in Brazil, where winter (so to speak) arrives with the Northern Hemisphere summer, and economic optimism, as exuberant as the vegetation, increases at the same brisk clip as U.S. foreclosures.
Huge offshore oil finds, a sugarcane ethanol boom, vast reserves of unused arable land, mineral wealth and abundant fresh water contribute to Brazilian buoyancy. But natural resources are only part of the story. As in China and India, an expanding internal market is bolstering growth. So is increasing corporate sophistication and global ambition.
At the annual National Forum, a gathering of business leaders, I felt like a first-world pipsqueak as leaders of the national energy company Petrobras (bigger than BP, Shell and Total) and Companhia Vale do Rio Doce, or C.V.R.D. (the world’s second largest mining company), reeled off head-turning statistics.
Petrobras, which has spearheaded Brazil’s push to self-sufficiency from heavy dependence on imported oil 30 years ago, will more than double oil production to 4.2 million barrels a day in 2015 from 1.9 million barrels today.
“With the latest discoveries, the South Atlantic will become a huge oil producer,â€
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Raju
US banks have siphoned off $5 trllion
http://www.ft.com/cms/s/0/33cab6b4-31d1 ... ck_check=1US banks fear being forced to take $5,000bn back on balance sheets
By Paul J Davies and Gillian Tett in Cannes and Jennifer,Hughes in London
Published: June 4 2008 03:00 | Last updated: June 4 2008 03:00
Accounting changes could force US banks to take thousands of billions of dollars back on to their balance sheets in the coming months in a move that is likely to curb further their lending and could push them into new capital raisings, analysts have warned.
Analysts at Citigroup said a planned tightening of the rules regarding off-balance sheet vehicles would force banks to reconsider arrangements and could result in up to $5,000bn of assets coming back on to the books.
The off-balance sheet vehicles have been used by financial institutions to keep some assets off their balance sheets, thereby avoiding the need to hold regulatory capital against them.
Birgit Specht, head of securitisation analysis at Citigroup, said: "We think it is very likely that these vehicles will come back on balance sheet.
"This will not affect liquidity because [they] are funded, but it will affect debt-to-equity ratios [at banks] and so significantly impact banks' ability to lend."
Ms Specht told a seminar at a conference on asset-backed securities in Cannes that the uncertainty about what might change was making banks uneasy about their investments. "Banks are not investing [in assets] right now because of funding issues and regulatory uncertainty."
The comments come as regulators and central bankers are intensifying behind-the-scenes discussions about the shape of the financial architecture in response to the credit turmoil.
A key component of these global talks - which are likely to come to a head in the next couple of months - will be the accounting regime for off-balance sheet vehicles, with some senior regulators pressing for a global initiative to bring these vehicles back on to the balance sheet, not just in the US but in Europe as well.
Both international and US accounting bodies are working on rule changes; the US standard-setter, the Financial Accounting Standards Board, is to decide today. US rulemakers have come under domestic pressure from regulators and policymakers who felt the rules allowed banks to hide too much of their exposure to subprime assets.
Although many leading banks have strengthened their capital, these steps have been focused on repairing the damage wreaked by credit losses - rather than offsetting any impact of new assets rolling back on balance sheets.
www.ft.com/usbanks
indeed, conventions on hunger and anti-globalization held in 5* centers in NYC, London, Paree, Zurich with free board n lodge for the jhola brigade.
what a life these parasites lead ? spending others money, never being held to account , never having to deliver on anything...just look around and "feed" on misfortunes, differences and cleavages with the help of their media classmates.
what a life these parasites lead ? spending others money, never being held to account , never having to deliver on anything...just look around and "feed" on misfortunes, differences and cleavages with the help of their media classmates.
May see bigger U.S. bank failures in future: FDIC
Thu Jun 5, 10:25 AM ET
WASHINGTON (Reuters) - Future U.S. bank failures linked to the downturn in the real estate market may include "institutions of greater size" than in the recent past, Federal Deposit Insurance Corp Chairman Sheila Bair said on Thursday.
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In testimony prepared for a Senate Banking Committee hearing on the state of the banking industry, Bair said an increasing number of problem banks face high exposure to commercial real estate and construction lending.
"There is also the possibility that future failures could include institutions of greater size than we have seen in the recent past," Bair said. "Uncertainties in today's economic environment continue to pose significant challenges for the banking industry, households, and bank regulators."
The FDIC, which has about $52.8 billion in its deposit insurance fund, has launched a review of its risk-assessment rates for larger banks to determine if they reflect current conditions, she said.
"The agency plans to examine, among other issues, whether changes in how long-term debt issuer ratings are used to determine premium rates can improve the assessment system's effectiveness in capturing risks posed by large institutions."
(Reporting by John Poirier; Editing by James Dalgleish)
Thu Jun 5, 10:25 AM ET
WASHINGTON (Reuters) - Future U.S. bank failures linked to the downturn in the real estate market may include "institutions of greater size" than in the recent past, Federal Deposit Insurance Corp Chairman Sheila Bair said on Thursday.
ADVERTISEMENT
In testimony prepared for a Senate Banking Committee hearing on the state of the banking industry, Bair said an increasing number of problem banks face high exposure to commercial real estate and construction lending.
"There is also the possibility that future failures could include institutions of greater size than we have seen in the recent past," Bair said. "Uncertainties in today's economic environment continue to pose significant challenges for the banking industry, households, and bank regulators."
The FDIC, which has about $52.8 billion in its deposit insurance fund, has launched a review of its risk-assessment rates for larger banks to determine if they reflect current conditions, she said.
"The agency plans to examine, among other issues, whether changes in how long-term debt issuer ratings are used to determine premium rates can improve the assessment system's effectiveness in capturing risks posed by large institutions."
(Reporting by John Poirier; Editing by James Dalgleish)
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Raju
The gods of greed
Larry Elliott and Dan Atkinson
The Guardian,
Monday June 2 2008
They promised economic stability, order and prosperity. But instead the world's bankers have delivered chaos, debt and uncertainty - and then blamed the feeble governments that surrendered control of the global economy to them. In the first of three extracts from their new book, Larry Elliott and Dan Atkinson explain how the reckless speculation of a super-rich elite has left us all the poorer
contd here ...
http://www.guardian.co.uk/business/2008 ... lrecession
Larry Elliott and Dan Atkinson
The Guardian,
Monday June 2 2008
They promised economic stability, order and prosperity. But instead the world's bankers have delivered chaos, debt and uncertainty - and then blamed the feeble governments that surrendered control of the global economy to them. In the first of three extracts from their new book, Larry Elliott and Dan Atkinson explain how the reckless speculation of a super-rich elite has left us all the poorer
contd here ...
http://www.guardian.co.uk/business/2008 ... lrecession
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Nayak
- BRF Oldie
- Posts: 2553
- Joined: 11 Jun 2006 03:48
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Re: GLOBAL ECONOMY
Walmart, carrefour and other supermarket chains are reporting a jump of nearly 20 % in their transactions because of the slowdown.
Are the days of splurging by the american consumer gone ?
My friend who moved to Atlanta on a temporary job was telling me the that job market has slowed down to a crawl.
Looks like it is time for the american citizens to follow the 3rd world role model of saving cash and living wisely.
Are the days of splurging by the american consumer gone ?
My friend who moved to Atlanta on a temporary job was telling me the that job market has slowed down to a crawl.
Looks like it is time for the american citizens to follow the 3rd world role model of saving cash and living wisely.
Re: GLOBAL ECONOMY
Pigs will start to fly before these spinmasters admit we are in the early throes of a serious recession.U.S. slowdown to be long, but no recession: survey Tue Jun 10, 1:27 AM ET
WASHINGTON (Reuters) - Economists have trimmed forecasts for U.S. growth in the second half of this year and in 2009, but more have come to the view that the United States will dodge a recession, a survey released on Tuesday showed.
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Blue Chip Economic Indicators, a monthly newsletter, said 53.5 percent of the 48 private economists surveyed for its June issue do not believe the U.S. economy is in or will enter a recession in 2008, up from 40 percent in the May survey.
"The consensus now suggests the downturn in economic growth will be less steep than earlier feared, but the subsequent recovery in growth to its trend rate will take longer than hoped a few months ago," the newsletter said.
The economists polled on June 2 and 3 projected third-quarter growth at a 1.5 percent annual rate, down from the 1.7 percent pace forecast a month ago. For the fourth quarter, they said the economy would likely expand by 1.2 percent, down from the 1.5 percent projected a month ago.
Despite the downgraded expectations for the second half of 2008, the consensus forecast for the year as a whole moved up to 1.5 percent from 1.4 percent as economists took into account an upward revision to first-quarter growth and bumped up their expectations for the second quarter to a still-anemic 0.4 percent from 0.2 percent.
The consensus projection for 2009, however, slipped for a sixth straight month, dropping to 1.9 percent from 2 percent.
Most analysts surveyed assumed below-trend economic growth will eventually free up enough spare economic capacity to begin exerting downward pressure on prices, the newsletter said.
"As a result, inflation is expected to increase much less in 2009 than in 2008," it said. The economists forecast that consumer prices would advance 3.9 percent this year, but just 2.6 percent in 2009.
The Federal Reserve has cut benchmark interest rates by 3.25 percentage points since mid-September to help buffer the impact of a deep housing downturn and tight credit, but policy-makers have signaled growing concerns on inflation.
The Blue Chip survey found the consensus of economists was that the Fed was finished lowering interest rates. However, the newsletter said the U.S. central bank was not expected to start raising rates until the second quarter of next year.
(Reporting by Nancy Waitz; Editing by Jonathan Oatis)
Even after the Enron/Wcom debacle the American public does not know how to read the coded messages. By the time they come of age...it will be too late and other countries would have become world powers and power will have to be shared.
George Kennan's objective of ensuring the flow of the majority of world resources to the west would be in limbo for all times to come.
Re: GLOBAL ECONOMY
Has Danger to U.S. Economy 'Diminished'?
Federal Reserve Chairman Ben Bernanke
Enlarge
Scott Olson
Federal Reserve Chairman Ben Bernanke addresses the Federal Reserve Bank of Chicago's annual conference in May. Getty Images
NPR.org, June 10, 2008 · Federal Reserve Chairman Ben Bernanke said Monday that the risk of the U.S. economy entering a substantial downturn "appears to have diminished" over the past month. But he also sounded a warning over soaring energy costs and said the central bank would "strongly resist" any tendency for an inflationary psychology to take hold.
Bernanke's comments have led to expectations that the Fed may start raising interest rates to combat growing inflation. But they've also raised questions about the current health of the U.S. economy. Here, a look at some key indicators:
Bernanke's statement signaled deepening concern about inflation. What are the risks inflation poses?
In an inflationary environment, people's purchasing power is diminished, largely because salaries cannot keep pace with the cost of living. Those relying on fixed incomes, such as Social Security or pensions, are hit particularly hard.
A weak dollar translates into higher costs for imports and raw materials, especially energy. Some of those higher wholesale prices get passed on to consumers.
It also could cause further weakness in the job market, says Michele Gambera, chief economist for Ibbotson Associates, a division of Morningstar. Lately the dollar seems to have "plateaued," he says. He predicts that interest rates in the U.S. may start to rise "sooner rather than later," in an effort by the Federal Reserve to strengthen the dollar.
Where do things stand with inflation?
Bernanke said inflation "remained high, largely reflecting sharp increases in the prices of globally traded commodities" — a result, in part, of increased demand from emerging markets for energy, grains and other raw materials. Rising energy prices have also "added to the upside risks to inflation and inflation expectations," the Fed chair said.
Edwin M. Truman, a senior fellow at the Peterson Institute for International Economics, says the spike in inflation is one sign that it may be time for the Fed to step back from its low-interest-rate policy of the past several years. "In retrospect, it does look like the monetary policy was too easy, [for] too long — both in the U.S. and around the world. That's what's fueled the credit expansion, and that has fueled that growth in demand [that] is outstripping the growth in supply," says Truman.
How is unemployment affecting the U.S. economy?
Last week, the Labor Department reported a jump in the unemployment rate from 5 percent in April to 5.5 percent in May — the biggest month-to-month increase in two decades. Bernanke characterized this as an "unwelcome rise." But he noted that the economic outlook overall was in line with what the Fed had forecast.
What about the impact of oil prices?
"Oil price increases act like a tax on consumers," Truman says. Higher oil prices push up inflation — and that pushes down economic activity, since people have less money to spend on goods and services. Oil prices are currently at more than $130 a barrel.
So does that mean the economy is heading toward a recession or improving?
Higher unemployment and skyrocketing oil costs have spurred concerns that the economy might be taking a turn for the worse.
"The economy is not going into a deep depression, but you're not going to have a bounce back to multiple [fiscal] quarters of above 3 percent growth," Truman says.
With reporting by NPR staff. The Associated Press contributed to this report.
http://www.npr.org/templates/story/stor ... d=91367010
Federal Reserve Chairman Ben Bernanke
Enlarge
Scott Olson
Federal Reserve Chairman Ben Bernanke addresses the Federal Reserve Bank of Chicago's annual conference in May. Getty Images
NPR.org, June 10, 2008 · Federal Reserve Chairman Ben Bernanke said Monday that the risk of the U.S. economy entering a substantial downturn "appears to have diminished" over the past month. But he also sounded a warning over soaring energy costs and said the central bank would "strongly resist" any tendency for an inflationary psychology to take hold.
Bernanke's comments have led to expectations that the Fed may start raising interest rates to combat growing inflation. But they've also raised questions about the current health of the U.S. economy. Here, a look at some key indicators:
Bernanke's statement signaled deepening concern about inflation. What are the risks inflation poses?
In an inflationary environment, people's purchasing power is diminished, largely because salaries cannot keep pace with the cost of living. Those relying on fixed incomes, such as Social Security or pensions, are hit particularly hard.
A weak dollar translates into higher costs for imports and raw materials, especially energy. Some of those higher wholesale prices get passed on to consumers.
It also could cause further weakness in the job market, says Michele Gambera, chief economist for Ibbotson Associates, a division of Morningstar. Lately the dollar seems to have "plateaued," he says. He predicts that interest rates in the U.S. may start to rise "sooner rather than later," in an effort by the Federal Reserve to strengthen the dollar.
Where do things stand with inflation?
Bernanke said inflation "remained high, largely reflecting sharp increases in the prices of globally traded commodities" — a result, in part, of increased demand from emerging markets for energy, grains and other raw materials. Rising energy prices have also "added to the upside risks to inflation and inflation expectations," the Fed chair said.
Edwin M. Truman, a senior fellow at the Peterson Institute for International Economics, says the spike in inflation is one sign that it may be time for the Fed to step back from its low-interest-rate policy of the past several years. "In retrospect, it does look like the monetary policy was too easy, [for] too long — both in the U.S. and around the world. That's what's fueled the credit expansion, and that has fueled that growth in demand [that] is outstripping the growth in supply," says Truman.
How is unemployment affecting the U.S. economy?
Last week, the Labor Department reported a jump in the unemployment rate from 5 percent in April to 5.5 percent in May — the biggest month-to-month increase in two decades. Bernanke characterized this as an "unwelcome rise." But he noted that the economic outlook overall was in line with what the Fed had forecast.
What about the impact of oil prices?
"Oil price increases act like a tax on consumers," Truman says. Higher oil prices push up inflation — and that pushes down economic activity, since people have less money to spend on goods and services. Oil prices are currently at more than $130 a barrel.
So does that mean the economy is heading toward a recession or improving?
Higher unemployment and skyrocketing oil costs have spurred concerns that the economy might be taking a turn for the worse.
"The economy is not going into a deep depression, but you're not going to have a bounce back to multiple [fiscal] quarters of above 3 percent growth," Truman says.
With reporting by NPR staff. The Associated Press contributed to this report.
http://www.npr.org/templates/story/stor ... d=91367010
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pradeepe
- BRFite
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Re: GLOBAL ECONOMY
Of all the cos I think Walmart is the one best placed to ride this recession out comfortably and I daresay even best the street.Nayak wrote:Walmart, carrefour and other supermarket chains are reporting a jump of nearly 20 % in their transactions because of the slowdown.
Are the days of splurging by the american consumer gone ?
My friend who moved to Atlanta on a temporary job was telling me the that job market has slowed down to a crawl.
Looks like it is time for the american citizens to follow the 3rd world role model of saving cash and living wisely.
Re: GLOBAL ECONOMY
they are going to be beating their chinese suppliers black n blue demanding lower prices.
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Nayak
- BRF Oldie
- Posts: 2553
- Joined: 11 Jun 2006 03:48
- Location: Vote for Savita Bhabhi as the next BRF admin.
Re: GLOBAL ECONOMY
Bovine-processed-matter-alert
'India biggest hoarder, food crisis to worsen'
'India biggest hoarder, food crisis to worsen'
Hyperbole is my best buddy when I need goras to pay attention to me.Aiyar, who was the lead panelist on a discussion of trade and security at a Heritage Foundation-FICCI sponsored conference on US-India Synergy: Facing the Economic Challenges of the 21st Century, said, "The government of India wants to crack down on hoarders, but the biggest hoarder actually is India by refusing the rice to be exported."
So why does India need to bother about ungrateful scum err neighbors ?Aiyar said that the IFPRI "has rightly called this 'starve your neighbor' policy,' and argued that India by imposing these export controls had effectively cut the production of rice.
Aiyar said by doing so, India had "managed to keep our rice prices only up 10 percent, (but) in neighboring Bangladesh, it is up 60 percent. So, this is what you call, 'Starve your neighbor policies."
But Shenggen Fan, division director, Development Strategy and Governance, said that the protectionism by India by curbing exports may have been what had helped the kind of food riots seen in some other Asian countries.
He recalled that just a few years ago, food prices in India were about 20-30 percent higher than global food prices, but "today, it is opposite. The domestic (food) price in India is actually about 20-30 percent lower than the global prices."
"The Indian government used trade restrictions and so, that is why in India you have not heard of any food riots and lots of complaints," he added.
Re: GLOBAL ECONOMY
NYT
Democratic plan
Tax on profits: Impose a 25 percent windfall profits tax on oil companies and use the money to invest in renewable energy.
Authority to sue: Give the U.S. government authority to sue OPEC for conspiring to raise oil prices.
More regulation: Enhance the ability of the Commodity Futures Trading Commission to regulate energy futures markets.
Undo tax breaks: Repeal $17 billion in tax breaks for the oil industry.
Republican plan
Arctic drilling: Open the Arctic National Wildlife Refuge in Alaska to oil drilling.
Coastal drilling: Allow states to approve drilling for oil and natural gas off their coasts.
Encourage refineries: Offer incentives to oil companies to build new refineries.
More tax breaks: Create new tax breaks to speed the development of coal-to-liquid fuels.
Democratic plan
Tax on profits: Impose a 25 percent windfall profits tax on oil companies and use the money to invest in renewable energy.
Authority to sue: Give the U.S. government authority to sue OPEC for conspiring to raise oil prices.
More regulation: Enhance the ability of the Commodity Futures Trading Commission to regulate energy futures markets.
Undo tax breaks: Repeal $17 billion in tax breaks for the oil industry.
Republican plan
Arctic drilling: Open the Arctic National Wildlife Refuge in Alaska to oil drilling.
Coastal drilling: Allow states to approve drilling for oil and natural gas off their coasts.
Encourage refineries: Offer incentives to oil companies to build new refineries.
More tax breaks: Create new tax breaks to speed the development of coal-to-liquid fuels.
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pradeepe
- BRFite
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- Joined: 27 Aug 2006 20:46
- Location: Our culture is different and we cannot live together - who said that?
Re: GLOBAL ECONOMY
The chinese will scrape the bottom and literally tear out the bottom and still deliver cheaper maal. Might seem despicable but will happen. Hunger is hunger no matter where it is.Singha wrote:they are going to be beating their chinese suppliers black n blue demanding lower prices.
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pradeepe
- BRFite
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Re: GLOBAL ECONOMY
So after all that gaseous rant, I read that sentence. So tell me again what is my problem."The Indian government used trade restrictions and so, that is why in India you have not heard of any food riots and lots of complaints," he added.
Re: GLOBAL ECONOMY
pradeepe wrote:So after all that gaseous rant, I read that sentence. So tell me again what is my problem."The Indian government used trade restrictions and so, that is why in India you have not heard of any food riots and lots of complaints," he added.
[/sarc on]Your problem is that you don't want to share your food with neighbours and quietly starve yourself as is expected of you.
Your problem is that you have food stocks, while the more deserving MuNNA allies don't.[/sarc off]
About people like Swaminathan S Aiyar, isn't he the one who wrote that J&K is occupied territory?
Isn't he the brother of Mani S. Aiyar, he of the "collect funds for Chinese soldiers during the 1962 war" fame?
Here is what comes to my mind about these two brothers:
"Iss ghar ko aag lag gayee ghar ke chiraag se"
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Raju
Re: GLOBAL ECONOMY
WORLD CARTEL CONJURES OIL PRICE. PROFIT $1 TRILLION YEARLY
By P.R.SIDDHARTHA
11 JUNE 2008
Is a Global Oil Cartel with a Global Political Agenda collapsing Political Systems across the world by making them unpopular with their voters by pushing the Oil Prices to an unbearable level of $200?
Political Bosses running Governments across the World have become corrupt. Yet they continue to Govern their nations to profit from unbridled corruption.
The Rocketing Oil prices are collapsing the Ruling Dynasties across the World!
ANALYSIS SENT BY A READER
Rocketing prices of oil in the international market have severely impacted the financial health of the oil importing countries due to unprecedented inflationary pressure. Crude prices have more than doubled during last one year from $65 to an unprecedented level of $ 139 per barrel. All the Oil Analysts are perplexed at this exponential growth. Nobody is clear as to when this price rise juggernaut will stop.
Some officials associated with oil business are predicting that the oil prices will touch $200 or more. Various reasons such as; natural and man-made constraints in oil supply and demand, lack of spare capacity with oil producers, peaking of oil production, weakening of dollar and role of speculators are being put forward to explain this unimaginable price levels.
Who is driving the oil price juggernaut?
A look at the main oil players shows that there are three distinct entities, namely private companies, OPEC and non-OPEC countries. Due to nationalisation of oil assets by oil producing countries, nearly 77 per cent of the world production comes from national oil companies of different oil producing countries. Many of these have political agenda rather than commercial considerations.
MNCs on their own have a limited role in manipulating oil production on large-scale as only 7 per cent of world’s oil reserves are in the countries which allow these MNCs a free hand. However, they have the resources and expertise in influencing market sentiments by planting distorted analyses through their present and former executives to create doomsday scenarios.
To put oil constraint rumours at rest some oil producing countries need to substantially increase their production. Capacity of OPEC to drastically change the oil dynamics has reduced considerably as 65 per cent of the total world production at present is in the hands of non-OPEC members.
Russia has the largest production levels and spare capacity to change the production dynamics. However, its oil production, which at one point even surpassed that of Saudi Arabia has reduced during last two years. It is debatable whether it was really due to peaking problems, as is being made or a deliberate act for escalating oil prices. The second option looks more plausible as Russia has been one of the greatest beneficiary of the boom in oil prices. It earns an additional $ 2 billion for every $1 increase in the international oil price.
A few years ago Russian economy was a basket case with its defaulting on international loans payments and facing international humiliation. Thanks to the oil price boom Russia has become the new energy king and has one of largest surplus reserves of foreign exchange in its history. Putin has understood the role of oil as a most potent weapon and played a key role by his oil diplomacy along with Venezuela and Iran to turn its full impact on western economies with a more deadly impact than nuclear weapons in the cold war.
Saudi Arabia used to act as a spoilsport in earlier attempts to raise oil prices under pressure from the US. Now it appears to have given its tacit support to new dispensation of oil turks led by Russia to shore up its dwindling economy and insulate itself from reduced returns due to decline of US dollar by 13.4 per cent in the last year.
OPEC claims that their net export revenue per capita is just 55 per cent of what it was in 1981 and there is scope for doubling the oil prices from 2007 level so as to strengthen their own economies. Thus, a figure of $ 200 per barrel is quite plausible in new future.
Some of the OPEC members claim that they have subsidised the world economy for too long at their own expenses. This was the main reason that George Bush could not push Saudi Arabia to increase its production substantially to calm the oil price storm and had to come back empty handed.
The telling impact of oil weapon has given flip to another idea of Putin to form a gas cartel on oil lines to push up gas prices in foreseeable future.
Another faceless but deadlier player than OPEC has emerged on the oil scene in the form of speculators. Oil speculators have stockpiled via the future market the equivalent of 1.1 billion barrels of petroleum, which is eight times the oil the US has added to its strategic petroleum reserves over five years or the increase in demand of oil in China over the last five years, which is growing at the rate of 20 per cent per year. This appears to be one of the major causes of runaway oil prices.
$ 260 billion has been invested in to the commodity market, which is up nearly 20 times from what it was in 2003. The stimulus has been a small margin of 5-7 per cent required in the US in the commodity market.
The implications of this low margin are that the speculators with a mere $ 260 billion are able to take positions on approximately $ 5 trillion in the future market. It is estimated that oil accounts for more than half of these bets.
The oil market has turned in to a gambling parlour.
Four financial companies turned oil traders namely Goldmen Sach, J.P.Morgan Chase, Citigroup and Morgan and Stanley now determine the oil prices and only they are aware who is entering in the oil future market. The staggering oil earning by oil producers are being pumped into future market to further maximise their profits. Analysts also claim that investors ruined by real estate meltdown, stocks, shares and bonds during last one year have jumped into the oil market and are making up their losses. Cuts in US interest rate and hedging against fall in dollar and inflation has also diverted the attention of investors to commodity market.
Seasoned oil analysts claim that out of $ 130 per barrel of oil price, $ 50-60 are the speculator’s premium. Some allege that there may be a tacit support of US government to oil speculators as strategic reserves are being filled to the brim at a time when the oil prices are touching new high, instead of using them to cool the runaway oil prices.
Alternatively, it might be a precursor of some geopolitical event of staggering proportions in the Middle East, which is likely to further escalate oil prices.
This shows that a tectonic shift for determining the international oil prices has taken place where oil producers and speculators are working as a cartel to fuel the oil price fire.
In the last three years Oil Companies Profited by an additional $ 3 trillion!
One of the most frequently quoted reasons is the mismatch between supply and demand of oil. International Energy Agency. March 2008 report showed that there has been a 3.8 per cent increase in oil supply during last one year, which was more than the average of five-year production levels. On the other hand , global oil consumption grew by just 0.7 per cent during this period, the weakest growth since 2001 and half of the last ten year average. In spite of this production increase, the oil price rose by 57 percent during this period and are continuously increasing.
Another theory being propagated by the oil analysts is that the world “oil reserves peak” either has already occurred or will occur in 2010/2015 and after that there will be downhill for the oil production capacity. Recent rigorous simulation and modeling done by EIA shows that peak will occur only beyond 2030 and there is no need to get alarmed . This conclusion is being sported by the fact that there has been a net addition of 277 billion barrels in the world oil reserves of 1317 billion barrels between 2000-2007 when net investment in oil exploration was very low. This shows that the prediction of oil doom is far fetched.
There appears to be some other reason than mismatch between supply and demand put forward by the analyst to explain the present surge in oil prices.
The recent price rise is due to the lack of crude “cushion” in the system at merely 1 per cent amounting to 1 million barrels per day out of total consumption of 85 million barrels per day.
Any bottleneck in production as a result of natural or man-made accidents or incidents create a scare in the market resulting in volatile sentiments. This has been effectively refuted by the current president of OPEC, who has emphatically stated that they have at present 3 million barrels per day excess capacity. If the figures of non-OPEC producers is added, the spare capacity is more than sufficient to take care of any major eventuality.
Major oil users of the world like the USA, OECD states and Japan have created strategic oil reserves to tide over these eventualities. Approximately 4.1 billion barrels of oil are held in strategic reserves in the world.
An artificial scare of low spare capacity is being created by the vested interest to further fuel the volatility in oil prices.
The recent meeting of the major oil importing countries is a step in the right direction.
Oil Importing Nations must join hands to devise a strategy to stop the OIL CARTEL from ruining the international monetary and political system.
By P.R.SIDDHARTHA
11 JUNE 2008
Is a Global Oil Cartel with a Global Political Agenda collapsing Political Systems across the world by making them unpopular with their voters by pushing the Oil Prices to an unbearable level of $200?
Political Bosses running Governments across the World have become corrupt. Yet they continue to Govern their nations to profit from unbridled corruption.
The Rocketing Oil prices are collapsing the Ruling Dynasties across the World!
ANALYSIS SENT BY A READER
Rocketing prices of oil in the international market have severely impacted the financial health of the oil importing countries due to unprecedented inflationary pressure. Crude prices have more than doubled during last one year from $65 to an unprecedented level of $ 139 per barrel. All the Oil Analysts are perplexed at this exponential growth. Nobody is clear as to when this price rise juggernaut will stop.
Some officials associated with oil business are predicting that the oil prices will touch $200 or more. Various reasons such as; natural and man-made constraints in oil supply and demand, lack of spare capacity with oil producers, peaking of oil production, weakening of dollar and role of speculators are being put forward to explain this unimaginable price levels.
Who is driving the oil price juggernaut?
A look at the main oil players shows that there are three distinct entities, namely private companies, OPEC and non-OPEC countries. Due to nationalisation of oil assets by oil producing countries, nearly 77 per cent of the world production comes from national oil companies of different oil producing countries. Many of these have political agenda rather than commercial considerations.
MNCs on their own have a limited role in manipulating oil production on large-scale as only 7 per cent of world’s oil reserves are in the countries which allow these MNCs a free hand. However, they have the resources and expertise in influencing market sentiments by planting distorted analyses through their present and former executives to create doomsday scenarios.
To put oil constraint rumours at rest some oil producing countries need to substantially increase their production. Capacity of OPEC to drastically change the oil dynamics has reduced considerably as 65 per cent of the total world production at present is in the hands of non-OPEC members.
Russia has the largest production levels and spare capacity to change the production dynamics. However, its oil production, which at one point even surpassed that of Saudi Arabia has reduced during last two years. It is debatable whether it was really due to peaking problems, as is being made or a deliberate act for escalating oil prices. The second option looks more plausible as Russia has been one of the greatest beneficiary of the boom in oil prices. It earns an additional $ 2 billion for every $1 increase in the international oil price.
A few years ago Russian economy was a basket case with its defaulting on international loans payments and facing international humiliation. Thanks to the oil price boom Russia has become the new energy king and has one of largest surplus reserves of foreign exchange in its history. Putin has understood the role of oil as a most potent weapon and played a key role by his oil diplomacy along with Venezuela and Iran to turn its full impact on western economies with a more deadly impact than nuclear weapons in the cold war.
Saudi Arabia used to act as a spoilsport in earlier attempts to raise oil prices under pressure from the US. Now it appears to have given its tacit support to new dispensation of oil turks led by Russia to shore up its dwindling economy and insulate itself from reduced returns due to decline of US dollar by 13.4 per cent in the last year.
OPEC claims that their net export revenue per capita is just 55 per cent of what it was in 1981 and there is scope for doubling the oil prices from 2007 level so as to strengthen their own economies. Thus, a figure of $ 200 per barrel is quite plausible in new future.
Some of the OPEC members claim that they have subsidised the world economy for too long at their own expenses. This was the main reason that George Bush could not push Saudi Arabia to increase its production substantially to calm the oil price storm and had to come back empty handed.
The telling impact of oil weapon has given flip to another idea of Putin to form a gas cartel on oil lines to push up gas prices in foreseeable future.
Another faceless but deadlier player than OPEC has emerged on the oil scene in the form of speculators. Oil speculators have stockpiled via the future market the equivalent of 1.1 billion barrels of petroleum, which is eight times the oil the US has added to its strategic petroleum reserves over five years or the increase in demand of oil in China over the last five years, which is growing at the rate of 20 per cent per year. This appears to be one of the major causes of runaway oil prices.
$ 260 billion has been invested in to the commodity market, which is up nearly 20 times from what it was in 2003. The stimulus has been a small margin of 5-7 per cent required in the US in the commodity market.
The implications of this low margin are that the speculators with a mere $ 260 billion are able to take positions on approximately $ 5 trillion in the future market. It is estimated that oil accounts for more than half of these bets.
The oil market has turned in to a gambling parlour.
Four financial companies turned oil traders namely Goldmen Sach, J.P.Morgan Chase, Citigroup and Morgan and Stanley now determine the oil prices and only they are aware who is entering in the oil future market. The staggering oil earning by oil producers are being pumped into future market to further maximise their profits. Analysts also claim that investors ruined by real estate meltdown, stocks, shares and bonds during last one year have jumped into the oil market and are making up their losses. Cuts in US interest rate and hedging against fall in dollar and inflation has also diverted the attention of investors to commodity market.
Seasoned oil analysts claim that out of $ 130 per barrel of oil price, $ 50-60 are the speculator’s premium. Some allege that there may be a tacit support of US government to oil speculators as strategic reserves are being filled to the brim at a time when the oil prices are touching new high, instead of using them to cool the runaway oil prices.
Alternatively, it might be a precursor of some geopolitical event of staggering proportions in the Middle East, which is likely to further escalate oil prices.
This shows that a tectonic shift for determining the international oil prices has taken place where oil producers and speculators are working as a cartel to fuel the oil price fire.
In the last three years Oil Companies Profited by an additional $ 3 trillion!
One of the most frequently quoted reasons is the mismatch between supply and demand of oil. International Energy Agency. March 2008 report showed that there has been a 3.8 per cent increase in oil supply during last one year, which was more than the average of five-year production levels. On the other hand , global oil consumption grew by just 0.7 per cent during this period, the weakest growth since 2001 and half of the last ten year average. In spite of this production increase, the oil price rose by 57 percent during this period and are continuously increasing.
Another theory being propagated by the oil analysts is that the world “oil reserves peak” either has already occurred or will occur in 2010/2015 and after that there will be downhill for the oil production capacity. Recent rigorous simulation and modeling done by EIA shows that peak will occur only beyond 2030 and there is no need to get alarmed . This conclusion is being sported by the fact that there has been a net addition of 277 billion barrels in the world oil reserves of 1317 billion barrels between 2000-2007 when net investment in oil exploration was very low. This shows that the prediction of oil doom is far fetched.
There appears to be some other reason than mismatch between supply and demand put forward by the analyst to explain the present surge in oil prices.
The recent price rise is due to the lack of crude “cushion” in the system at merely 1 per cent amounting to 1 million barrels per day out of total consumption of 85 million barrels per day.
Any bottleneck in production as a result of natural or man-made accidents or incidents create a scare in the market resulting in volatile sentiments. This has been effectively refuted by the current president of OPEC, who has emphatically stated that they have at present 3 million barrels per day excess capacity. If the figures of non-OPEC producers is added, the spare capacity is more than sufficient to take care of any major eventuality.
Major oil users of the world like the USA, OECD states and Japan have created strategic oil reserves to tide over these eventualities. Approximately 4.1 billion barrels of oil are held in strategic reserves in the world.
An artificial scare of low spare capacity is being created by the vested interest to further fuel the volatility in oil prices.
The recent meeting of the major oil importing countries is a step in the right direction.
Oil Importing Nations must join hands to devise a strategy to stop the OIL CARTEL from ruining the international monetary and political system.
Re: GLOBAL ECONOMY
Home price drop means $4 trillion in lost capital
NEW YORK: No one knows when the credit crisis will end.
But when it does, US home prices may have lost a third of their value, high-yield bond valuations will hit levels close to those seen during the last recession, and what may amount to $1 trillion of Wall Street losses may translate into almost $4 trillion of lost access to capital.
That's the view of top credit analysts, who say a US housing decline, sparked last year by subprime mortgage debt defaults, will likely last another two years as a wider group of consumers, including prime borrowers, feel the pinch from a tightening of credit.
Peter Acciavatti, a credit analyst and managing director at JP Morgan Securities Inc, said in an interview that Wall Street write-downs and losses totaling at least $325 billion so far may ultimately mean $3.9 trillion in tighter credit conditions.
Moreover, home prices may fall as much as 30 percent from their peak in 2006 and not hit bottom until 2010, with greater drops still in subprime mortgage debt markets, he told Reuters.
Re: GLOBAL ECONOMY
reuters:
Citigroup to shut hedge fund co-founded by CEO: report
Thu Jun 12, 2008 2:02am EDT
NEW YORK (Reuters) - In a blow to Citigroup Inc (C.N: Quote, Profile, Research) Chief Executive Vikram Pandit, the bank plans to close a hedge fund he co-founded and will buy what is left of its assets, The Wall Street Journal reported on Thursday.
Last month, Citi said it was looking at restructuring Old Lane. Nearly all investors unaffiliated with the fund had requested to redeem their money from the fund, Citi said in a regulatory filing at the time.
Citi bought Old Lane last year for more than $600 million, but the fund's performance has since been disappointing. Citi wrote down $200 million of intangible assets linked to the acquisition in the first quarter.
"We are in the process of restructuring Old Lane," Citigroup spokesman Jon Diat told the Journal. "Its business and its people continue to be valuable to us. We are confident that we can realize that value over time."
Pandit personally reaped at least $165 million when Citigroup bought Old Lane, at which time it had amassed about $4.5 billion of assets.
A spokesman for Citigroup could not immediately be reached for comment on the newspaper report.
Citigroup officials had considered a plan to replenish Old Lane with anywhere from $1 billion to $3 billion of the bank's own capital, according to the Journal.
It reported that Old Lane CEO Guru Ramakrishnan said in a memo last month that the fund had secured a "substantial" amount of fresh capital, according to people who saw the document.
Citigroup has reported losses of nearly $15 billion for the past two quarters, forcing it to cut jobs and sell businesses. It has raised about $39 billion in capital since last November.
The bank is expected to take a charge in the second quarter related to the closure of Old Lane, the Journal said, adding that in the first quarter it wrote down the value of Old Lane by $202 million to reflect investor departures from the hedge fund. (Reporting by Christopher Kaufman; Editing by Kim Coghill and Erica Billingham)
© Thomson Reuters 2008 All rights reserved
Citigroup to shut hedge fund co-founded by CEO: report
Thu Jun 12, 2008 2:02am EDT
NEW YORK (Reuters) - In a blow to Citigroup Inc (C.N: Quote, Profile, Research) Chief Executive Vikram Pandit, the bank plans to close a hedge fund he co-founded and will buy what is left of its assets, The Wall Street Journal reported on Thursday.
Last month, Citi said it was looking at restructuring Old Lane. Nearly all investors unaffiliated with the fund had requested to redeem their money from the fund, Citi said in a regulatory filing at the time.
Citi bought Old Lane last year for more than $600 million, but the fund's performance has since been disappointing. Citi wrote down $200 million of intangible assets linked to the acquisition in the first quarter.
"We are in the process of restructuring Old Lane," Citigroup spokesman Jon Diat told the Journal. "Its business and its people continue to be valuable to us. We are confident that we can realize that value over time."
Pandit personally reaped at least $165 million when Citigroup bought Old Lane, at which time it had amassed about $4.5 billion of assets.
A spokesman for Citigroup could not immediately be reached for comment on the newspaper report.
Citigroup officials had considered a plan to replenish Old Lane with anywhere from $1 billion to $3 billion of the bank's own capital, according to the Journal.
It reported that Old Lane CEO Guru Ramakrishnan said in a memo last month that the fund had secured a "substantial" amount of fresh capital, according to people who saw the document.
Citigroup has reported losses of nearly $15 billion for the past two quarters, forcing it to cut jobs and sell businesses. It has raised about $39 billion in capital since last November.
The bank is expected to take a charge in the second quarter related to the closure of Old Lane, the Journal said, adding that in the first quarter it wrote down the value of Old Lane by $202 million to reflect investor departures from the hedge fund. (Reporting by Christopher Kaufman; Editing by Kim Coghill and Erica Billingham)
© Thomson Reuters 2008 All rights reserved
Re: GLOBAL ECONOMY
http://beafraid.wordpress.com/
Free-trade era may be nearing end amid food, growth concerns
This article from Bloomberg supports one of the central ideas of this blog - that the capitalist economic system is in its final stages. The purported cause for this is because the globes resources cannot manage any more economic growth, and this may be true to an extent. However, my personal belief is that the capitalists have formed a workable oligarchy to control all major industries and now are intent on shutting down the capitalist system which may pose serious threats to them in the future.
Shutting down the free markets
Interestingly, the market forces of supply and demand are being blamed for the price spikes in commodities that have occurred this year. Although on the surface this seems like a plausible explanation, it does not take into account the sudden dramatic increases for certain commodities. There has been ample evidence to suggest that commodities are increasing in price because the currency they are priced in continues to decline in value.
But as the officials insist that market forces are the culprit, the obvious solution is to construct more regulations to limit the influence of the market. This is commonly called market intervention. Already tighter regulations in futures markets are being proposed by the CFTC in conjunction with the UK’s Financial Service Authority in order to limit the size of trade positions. The CFTC also announced that it is creating an interagency task force consisting of the Federal Reserve and other agencies to see what is drawing so many new investors into the commodities market. No doubt even more regulations will be put in place as a result.
However, the picture is incomplete without taking into account Peak Oil, which some experts claim we have already passed. With oil being so vitally important to the global economy, its diminishing supply will mean governments will have to impose disincentives through taxes and rations to force countries into finding alternative fuels. Truthfully, without a continually expanding oil supply, a continually expanding global economy is unachievable. The United Nations have planned for the event of Peak Oil with an economic model called ’sustainable development’, which is essentially a zero growth economy. In this economic model, capitalist ideas based on growth and profit will have no use.
Re: GLOBAL ECONOMY
Asia urged to lead the way in solving global economic crises
KUALA LUMPUR (AP): Global financial institutions are proving to be impotent in dealing with crises such as food and fuel prices, and it is up to Asia as the emerging center of world power to take the lead in finding solutions, business leaders said Sunday.
The comments came at the annual World Economic Forum on East Asia, a high-profile gathering of business and government leaders, in Kuala Lumpur, Malaysia.
As economic clout drifts away from the United States and Europe to Asia it must spearhead the resolution of economic crises, said Yashwant Sinha, India's former finance minister.
Global institutions that deal with economic problems are looking ``pretty out of date,'' Barclays Plc Chairman Marcus Agius told the forum's first session.
``I believe that the international institutions we have at the moment _ including the World Trade Organization _ are woefully inadequate in dealing with the global challenges,'' said Sinha.
He gave the example of the crisis in the world stock markets stemming from the subprime mortage debacle in the United States.
Had the crisis occurred anywhere in Asia or Latin America, a ``huge team'' from the International Monetary Fund would have descended there with advice, just as it did during the 1997-98 Asian financial crisis, Sinha said.
``There is a major regulatory failing in the U.S. What is the IMF doing about the U.S.? Nothing,'' said Sinha, also a former foreign minister.
``Global institutions are inadequate. They are not responding to global challenges,'' he said, highlighting record- high crude oil prices, which reached nearly US$140 last week before settling at US$134.86 on Friday.
Rapid hikes in the price of rice and other agriculture products have also set off riots and protests from Africa to Asia and elevated fears of a global food crisis.
``I would say that this is where there is an opportunity for Asia. There are a whole host of things that Asian nations can do together. We must start writing the rules of the game,'' said Sinha, now a member of India's Parliament.
Asian countries must help each other in dealing with crises because the U.S. can no longer be expected to be ``the locomotive of the global economy,'' said Yoshimi Watanabe, Japan's minister of financial services and administrative reforms.
``The Asian countries are in the same boat, we share the same destiny,'' he said.
Asia, led by India and China, will define the global economy in the future, thanks to its insatiable demand for consumer goods, investment opportunities and rapidly growing economies, those attending the forum were told.
``The shift in the economy around the world has been dramatic,'' Lord Peter Levene, chairman of London-based Lloyd's, the world's biggest insurance market, told reporters before the start of the conference.
``If you're traveling in Europe and the United States, there's a feeling of doom and gloom. Here you step off the plane and it's the opposite. This is the right place to be at the moment,'' Levene said.
Still, Asian governments are confronted with a wide range of risks, Levene said, noting that China is spending immense time and expense to deal with natural disasters and other threats.
``Up to very recently, the (Asian) region was a follower in the global agenda. This is the first time the region is becoming a leader,'' said Peter Brabeck-Letmathe, chairman of the Swiss food and drinks giant Nestle.
Re: GLOBAL ECONOMY
I heard in NPR that a lot of farms were destroyed by midwest floods in US.
Another reason for speculators to raise food prices through the roof.
Another reason for speculators to raise food prices through the roof.
Re: GLOBAL ECONOMY
Free trade coming to an end will not be good for the human civilization as it led to more cross fertilization and natural selection of the best genetic factors. It is also a golden opportunity for Indians to migrate in large numbers to sparsely populated lands in the west.
If this comes to an end, it may lead to weakening of the links that Indian diaspora has with the motherland.
If this comes to an end, it may lead to weakening of the links that Indian diaspora has with the motherland.
Re: GLOBAL ECONOMY
> Home price drop means $4 trillion in lost capital
anyone who bought a home in the US within the past 3 years with a morgage on it is going to be in a real financial mess.
anyone who bought a home in the US within the past 3 years with a morgage on it is going to be in a real financial mess.
Re: GLOBAL ECONOMY
Why so? If it is conventional mortgage.Neshant wrote:> Home price drop means $4 trillion in lost capital
anyone who bought a home in the US within the past 3 years with a morgage on it is going to be in a real financial mess.
Re: GLOBAL ECONOMY
If the value of the house goes below the purchase price. The value of the properties is supposed to go down to 2003 level in some markets.John Snow wrote:Why so? If it is conventional mortgage.Neshant wrote:> Home price drop means $4 trillion in lost capital
anyone who bought a home in the US within the past 3 years with a morgage on it is going to be in a real financial mess.
Re: GLOBAL ECONOMY
That only takes away the equity built into the home ( which is is like your stock price going down south) but it still will have interensic value as long as some one is buying.Acharya wrote:[If the value of the house goes below the purchase price. The value of the properties is supposed to go down to 2003 level in some markets.
If some one bought a home for a inflated price ( as most properties were inflated by appraisers) then yes it will lose the equity.
Re: GLOBAL ECONOMY
The difference between stock depreciation and home depreciation is that, if stock goes down you have the option to do nothing and wait till it comes back up. If the house price depreciates, you still have to stretch your wallet to make payments every month, which just goes into the drain, continue paying tax and insurance at its original price. Would you like to stretch yourself every month for nothing, or just walk out? Add energy and food price inflation to your overhead.
Re: GLOBAL ECONOMY
How imbalances led to credit crunch and inflation
Inflation is always and everywhere a monetary phenomenon. Milton Friedman.What explains the combination of a “credit crunch” in the US with soaring commodity prices and rising inflation across the globe? Are these unrelated events or part of a bigger picture? The answer is the latter. So far this is not a return to the 1970s. But action is needed to keep this true.
Inflation is a sustained rise in the price level: the result of too much money (or purchasing power) chasing too few goods and services. A one-off jump in commodity prices is not inflation. Nor need such a jump cause inflation. But a continuous rise in the relative price of commodities is a symptom of an inflationary process.
Whenever excess demand hits, the goods whose prices rise first are ones with flexible prices, of which commodities are the prime example. Commodity prices then are a pressure gauge. If we look at what has been happening in recent years, the gauge is showing red. The Goldman Sachs index of commodity prices has doubled since early 2007. Nominal prices of oil have increased by 150 per cent over the same period. The upward movement in commodity prices has persisted for 6½ years. It looks as though too much extra demand is pressing on too little ability to increase global supply.
The result is unexpectedly big increases in overall inflation: the consensus for world consumer price inflation in 2008 has jumped from the 2.4 per cent forecast in February 2007 to the 4.3 per cent forecast in June 2008. These jumps are modest, but not that modest. Nor is the forecast level. If people get used to the idea that inflation can jump like this, the notion may well become embedded in expectations, with dire consequences.
Yet how can we have an incipient global inflationary process when the US economy and those of other significant high-income countries are slowing down? The proximate reason is that they matter far less than they used to. The underlying explanation lies in the forces driving both global demand and supply.
On demand, two big things are happening: convergence and the imbalances. Under convergence comes the accelerated growth of emerging economies, above all of China and India. Under imbalances come the interventions in currency markets aimed at supporting competitiveness.
Charles Dumas of London-based Lombard Street Research notes that, at purchasing power parity, China now generates a little over a quarter of world economic growth in a normal year, while emerging and developing countries together generate 70 per cent. Even at market exchange rates, the growth of China’s gross domestic product is as big as that of the US in normal years for both countries.
The emerging countries are also in a good position to keep on growing, largely because they have such strong external positions. Many emerging economies have intervened in currency markets on a huge scale, principally in order to keep export competitiveness up and current account deficits down. Over the seven years to March 2008, global foreign currency reserves jumped by $4,900bn (€3,175bn, £2,505bn), with China’s reserves alone up by $1,500bn. Indeed, as much as 70 per cent of today’s reserves have been accumulated over this period. “Never again,” said the emerging countries hit by crises in the 1980s and 1990s; “not even once,” said China.
Interventionist policies aimed at sustaining export competitiveness expand economies. The results normally include rapid rises in net exports, low interest rates, aimed at curbing the capital inflow, and expansion in the monetary base, despite attempts at sterilisation. The Chinese economy is overheating as a direct result of this trio of effects.
Most of these reserves were accumulated by countries more or less explicitly targeting the US dollar and accumulating US liabilities. The resulting capital flow financed the US trade and current account deficits. But a trade deficit is contractionary: for any given level of domestic demand, it lowers domestic output. Thus, the US needed to expand domestic demand, in order to offset the contractionary effect of the external deficits. Some groups within the economy needed to spend more than their incomes. The most important such group turned out to be households. Thus the growth in US household indebtedness that led to today’s “credit crunch” is a direct result of the global imbalances.
Today, the hapless Federal Reserve is trying to re-expand demand in a post-bubble US economy. The principal impact of its monetary policy comes, however, via a weakening of the US dollar and an expansion of those overheating economies linked to it. To simplify, Ben Bernanke is running the monetary policy of the People’s Bank of China. But the policy appropriate to the US is wildly inappropriate for China and indeed almost all the other countries tied together in the informal dollar zone or, as some economists call it, “Bretton Woods II”.
Thus, not only have the imbalances proved hugely destabilising in the past, but they are going to prove even more destabilising now that the US bubble has burst. When most emerging economies need much tighter monetary policy, they are forced to loosen still further.
Meanwhile, on the supply side of the world economy, almost every piece of news has been bad. Whatever optimism one might feel about long-run possibilities for increased supply of energy, it is impossible to be optimistic about the short run.
What we see then is an incipient global inflation. Yet the central bank with the greatest influence on global monetary policy is the one confronting the post-bubble credit crunch. Its post-bubble predicament is made worse by the soaring energy prices that result from the strong growth of the world economy.
This then is a global challenge. The advanced countries are no longer the global driving force: they are importing inflation. If the world had a single central bank and a single currency, the former would surely tighten its monetary policy, in light of the evidence on the constraints on the rate of growth of potential global supply. In the absence of such a central bank, the right alternative has to be greater exchange rate flexibility and targeting of domestic inflation.
The world as a whole cannot import inflation: if every central bank assumes that the rise in commodity prices is the product of policies made elsewhere, general overheating must be the result. Worse, if that feeds into expectations the world will be depressingly similar to the 1970s. We are not there. Policymakers must ensure we never do get there.
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Re: GLOBAL ECONOMY
Got the follwoing from PRNewsWire:
US Logistic Costs Surge to Record High in 2007; Now Account for More Than 10% of US GDP PR Newswire WASHINGTON, June 18 WASHINGTON , June 18 /PRNewswire/ -- An annual benchmark released today shows the impact of rising energy and carrying costs on the US economy. The 19th Annual "State of Logistics Report(R)" released by the Council of Supply Chain Management Professionals (CSCMP) shows that logistics costs increased $91 billion in 2007.
Since 1988, the report has tracked and measured all costs associated with moving goods through the US supply chain. In 2007, total US logistics costs grew to nearly $1.4 trillion , representing 10.1% of US Gross Domestic Product (GDP).
"Supply chain costs are not always visible to the consumer, yet are a major and growing segment of the economy," said Rick Blasgen , president and CEO of CSCMP. "That $1.4 trillion equals annual government spending on national defense, health, and Social Security combined."
Put in human terms, the logistics cost of moving goods is equal to $4,656 for every man, woman, and child in the US. Historically, logistics costs, as a percent of GDP, had dropped for decades. They bottomed out in 2003, representing 8.6% of GDP. Since then, rising transportation, inventory, and interest costs pushed them up each year.
Other key findings
In 2007, intermodal freight, international containers, and truck freight volumes were down. Truckers in particular had a rough time. Over 2,000 trucking company bankruptcies were recorded last year in fleets operating five or more trucks. The trend appears to be accelerating as 935 trucking firms filed for bankruptcy in first quarter 2008.
Another significant trend: inventories are increasing after many years of tightening. "For the first time ever, wholesale inventories are larger than retail inventories," said Blasgen. "This is a result of retailers continuing to tighten their inventories coupled with manufacturing shifts in sourcing."
Founded in 1963 as the preeminent association for individuals involved in supply chain management and logistics, CSCMP provides educational, career development, and networking opportunities to over 9,000 members and the entire industry.
SOURCE
Council of Supply Chain Management Professionals
Council of Supply Chain Management Professionals CSCMP
Re: GLOBAL ECONOMY
US merchandise sales will decline on all fronts one expects, even in wal mart. this will flow back
to the chinese factories in reduced demand.
to the chinese factories in reduced demand.
Re: GLOBAL ECONOMY
NYT
Spielberg Said to Be Seeking Deal
By HEATHER TIMMONS
Published: June 19, 2008
NEW DELHI — Steven Spielberg’s DreamWorks SKG film studio may soon get a lift from Bollywood.
The production company, which has been tussling with its parent, Paramount Pictures, is in discussions with Reliance Entertainment, part of one of the largest conglomerates in India, about a cash infusion of a half billion dollars or more that could allow DreamWorks to split from Paramount.
Any deal is still in the discussion stages, people briefed on the negotiations said on Wednesday. It may be several weeks before an agreement is signed, one such person said. What is being discussed would bring Mr. Spielberg and his business partner, David Geffen, $500 million to $600 million in cash, in return for an undisclosed stake in their company.
A spokesman for Reliance ADA, Reliance Entertainment’s parent, declined to comment on the talks, which were first reported on Wednesday in The Wall Street Journal.
Reliance ADA also owns one of the largest telecommunications businesses in India, which is making to acquire the MTN Group of South Africa in a deal that could be valued at more than $40 billion. The group is controlled by Anil Ambani, the younger brother of India’s richest man, Mukesh Ambani, who controls a rival group. As Mukesh’s company, called Reliance Industries, expands in India, Anil has increasingly looked at foreign growth.
Reliance Entertainment is a new venture with ambitious plans. The group owns an Indian film exhibition and production company, Adlabs Films, and the largest FM radio network in India. Reliance Entertainment in May announced that it would finance films by production companies run by some of Hollywood’s biggest stars, including George Clooney and Tom Hanks.
In February, the billionaire financier George Soros bought a 3 percent stake in Reliance Entertainment for $100 million. Reliance Entertainment executives said this year that they planned to create a $10 billion company that will be one of the world’s largest entertainment concerns. In addition to Hollywood, Reliance Entertainment is planning to expand in television, online gambling and social networking.
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p.s. they own zapak.com the gaming portal
Spielberg Said to Be Seeking Deal
By HEATHER TIMMONS
Published: June 19, 2008
NEW DELHI — Steven Spielberg’s DreamWorks SKG film studio may soon get a lift from Bollywood.
The production company, which has been tussling with its parent, Paramount Pictures, is in discussions with Reliance Entertainment, part of one of the largest conglomerates in India, about a cash infusion of a half billion dollars or more that could allow DreamWorks to split from Paramount.
Any deal is still in the discussion stages, people briefed on the negotiations said on Wednesday. It may be several weeks before an agreement is signed, one such person said. What is being discussed would bring Mr. Spielberg and his business partner, David Geffen, $500 million to $600 million in cash, in return for an undisclosed stake in their company.
A spokesman for Reliance ADA, Reliance Entertainment’s parent, declined to comment on the talks, which were first reported on Wednesday in The Wall Street Journal.
Reliance ADA also owns one of the largest telecommunications businesses in India, which is making to acquire the MTN Group of South Africa in a deal that could be valued at more than $40 billion. The group is controlled by Anil Ambani, the younger brother of India’s richest man, Mukesh Ambani, who controls a rival group. As Mukesh’s company, called Reliance Industries, expands in India, Anil has increasingly looked at foreign growth.
Reliance Entertainment is a new venture with ambitious plans. The group owns an Indian film exhibition and production company, Adlabs Films, and the largest FM radio network in India. Reliance Entertainment in May announced that it would finance films by production companies run by some of Hollywood’s biggest stars, including George Clooney and Tom Hanks.
In February, the billionaire financier George Soros bought a 3 percent stake in Reliance Entertainment for $100 million. Reliance Entertainment executives said this year that they planned to create a $10 billion company that will be one of the world’s largest entertainment concerns. In addition to Hollywood, Reliance Entertainment is planning to expand in television, online gambling and social networking.
---
p.s. they own zapak.com the gaming portal
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abhischekcc
- BRF Oldie
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Re: GLOBAL ECONOMY
>>In addition to Hollywood, Reliance Entertainment is planning to expand in television, online gambling and social networking.
Isn't online gambling banned in India?
How do they propose to do it?
Isn't online gambling banned in India?
How do they propose to do it?
Re: GLOBAL ECONOMY
doesnt have to be in india or allow indian users.
-
pradeepe
- BRFite
- Posts: 741
- Joined: 27 Aug 2006 20:46
- Location: Our culture is different and we cannot live together - who said that?
Re: GLOBAL ECONOMY
They can always setup shop in some oiropean entity. Gibraltor is well known for it. A close relative works in one such entity in India with its base in Gibraltor.
Re: GLOBAL ECONOMY
bloomberg:
Paulson & Co. Says Writedowns May Reach $1.3 Trillion (Update3)
By Tom Cahill and Poppy Trowbridge
June 18 (Bloomberg) -- John Paulson, founder of the hedge fund company Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.
``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''
Paulson, whose New York-based company manages about $33 billion, made bets last year that subprime-mortgage debt would fall after he noticed ``bubble like'' prices. His Paulson Partners fund rose 18 percent a year since it started in 1994, and his main subprime-debt fund rose 591 percent last year. Banks and securities firm worldwide posted more than $395 billion in losses and writedowns since the subprime crisis started last year.
The U.S. is heading into a recession as falling home prices weigh on consumer spending, Paulson said. The second half of this year will be worse than the first as the economic slowdown spills into 2009. Signs of stress are ``accelerating'' in the housing market, and he's betting on falling securities prices, he said.
``I don't consider myself a bull or a bear,'' he told the audience at Monaco's Grimaldi Forum. ``I'm a realist.''
A Royal Bank of Scotland Group Plc strategist agrees that stock and credit markets still face the worst in a slump that started almost eight months ago.
`Most Bearish Period'
``Mid-July through to October is likely to be the most bearish period we will experience in the bear market that began in the fourth quarter of last year,'' Bob Janjuah, a credit strategist at the bank in London, wrote in a report dated June 11.
Paulson & Co. Says Writedowns May Reach $1.3 Trillion (Update3)
By Tom Cahill and Poppy Trowbridge
June 18 (Bloomberg) -- John Paulson, founder of the hedge fund company Paulson & Co., said global writedowns and losses from the credit crisis may reach $1.3 trillion, exceeding the International Monetary Fund's $945 billion estimate.
``We're only about a third of the way through the writedowns,'' Paulson, 52, told the GAIM International hedge fund conference in Monaco today. ``There are a lot of problems out there and it will continue to be felt through the year. We don't see any signs of stabilizing.''
Paulson, whose New York-based company manages about $33 billion, made bets last year that subprime-mortgage debt would fall after he noticed ``bubble like'' prices. His Paulson Partners fund rose 18 percent a year since it started in 1994, and his main subprime-debt fund rose 591 percent last year. Banks and securities firm worldwide posted more than $395 billion in losses and writedowns since the subprime crisis started last year.
The U.S. is heading into a recession as falling home prices weigh on consumer spending, Paulson said. The second half of this year will be worse than the first as the economic slowdown spills into 2009. Signs of stress are ``accelerating'' in the housing market, and he's betting on falling securities prices, he said.
``I don't consider myself a bull or a bear,'' he told the audience at Monaco's Grimaldi Forum. ``I'm a realist.''
A Royal Bank of Scotland Group Plc strategist agrees that stock and credit markets still face the worst in a slump that started almost eight months ago.
`Most Bearish Period'
``Mid-July through to October is likely to be the most bearish period we will experience in the bear market that began in the fourth quarter of last year,'' Bob Janjuah, a credit strategist at the bank in London, wrote in a report dated June 11.