Perspectives on the global economic meltdown- (Nov 28 2010)

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Perspectives on the global economic meltdown- (Nov 28 2010)

Postby ramana » 28 Nov 2010 21:54

The earlier thread has reached 100 pages. Please continue here.

Thanks, ramana

Link to earlier thread:

LINK to last page

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 28 Nov 2010 23:04

http://www.nytimes.com/2010/11/26/busin ... f=business

Family’s Fall From Affluence Is Swift and Hard
¶ It is a far cry from the life that Mr. Martin and his family enjoyed until recently at their Adirondacks waterfront camp at Tupper Lake, N.Y. Their garage held three stylish cars, including a yellow Aston Martin; they owned three horses, one that cost $173,000; and Mr. Martin treated his wife, Kate, to a birthday weekend at the Waldorf-Astoria, with dinner at the “21” Club and a $7,000 mink coat.

¶ That luxurious world was fueled by a check Mr. Martin received in 1998 for $14 million, his share of the $600 million sale of Martin Media, an outdoor advertising business begun by his father in California in the 1950s. After taxes, he kept about $10 million.

¶ But as so often happens to those lucky enough to realize the American dream of sudden riches, the money slipped through the Martins’ fingers faster than they ever imagined.

¶ They faced temptations to indulge, with the complexities and pressures of new wealth. And a pounding recession pummeled the value of their real estate and new financial investments, rendering their properties unaffordable.

¶ The fortune evaporated in little more than a decade.

¶ While many millions of Americans have suffered through this recession with only unemployment benefits to sustain them, Mr. Martin has reason to give thanks — he has landed a job at 59, however far away. He also had assets to sell to help tide his family over.

¶ Still, Mr. Martin, a strapping man with a disarming bluntness, seemed dazed by it all. “We are basically broke,” he said.

¶ Though he faulted the conventional wisdom of investing in stocks and real estate for some of his woes, along with poor financial advice, he accepted much of the blame himself.

¶ “We spent too much,” he conceded. “I have a fourth grader, an eighth grader and a girl who just finished high school. I should have kept working and put the money in bonds.”

¶ Mrs. Martin recalled the summer night in 1998 when the family was having a spaghetti dinner at home in Paso Robles, in central California, and a bank representative called to ask where to wire the money. “It seemed like an unbelievable amount,” she said regretfully.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 29 Nov 2010 02:03

Regarding Sidor's post here viewtopic.php?p=985665#p985665

There is a fundamental flaw in the argument. Ireland has to cut budget even if it takes bail out. But if it defaults, it doesn't have to pay back big chunk of the debt it owes now. It will also gain freedom to print its own money and to control fiscal policies.

Those who believe that Ireland has to pay back the debt must understand the root of the debt. Bank lent those risky loans because bank could afford to. They did not lent the money they got from the savings of the people. They borrowed that money from central banks. Where did central banks get that money? They just printed it. If those Irish banks are not able to pay the debt back, let the central banks write them off (it costs them nothing) or bail out those local banks. Government, tax payers and ordinary people need not be involved in this. When they forced Ireland to nationalize those private debt, the current and future generations are made to suffer for the games played using money printed from thin air. Those sufferings are real, unlike the virtual money.

When ECB and IMF bail out Ireland, they again use printed the money or borrow printed money. Their money doesn't come from savers in Asia. In that case, they could give that free money to Ireland to pay back the debt.

What we are seeing is banana economy with nice wrapper. Let us first understand the content inside before appreciating the wrapper.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Prem » 29 Nov 2010 02:29

The United States Should Stage an IPO
http://www.realclearmarkets.com/article ... 98773.html

( Wholesale Sale , Bikau maal)
The proceeds from the sale of the GDP Shares and the Revenue Shares could be spectacular. The securities would possess a unique combination of attributes, including inflation protection, freedom from the risk of default, freedom from all taxes, ultimate diversification, and considerable potential for appreciation based upon future economic growth. If the markets valued the new shares based upon the "present value to the infinite horizon" (PVIH) of future GDP and future Federal revenues, the two IPOs could bring in as much as $2.5 trillion. (By way of comparison, total Federal debt held by the public is $9.2 trillion right now.) And, this $2.5 trillion number assumes a somewhat pessimistic economic outlook, with the PVIH calculations based upon the GDP growth rates assumed in the 2010 Social Security Trustees report and the "tax take" (Federal revenues as a percent of GDP) assumed in the CBO LTBO AFS case. The impact on the Federal deficit of the sale of these new securities would be positive in the short term, because the dividends would be less than the interest that would have otherwise been paid on Treasury debt.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 29 Nov 2010 11:09

Default! Say the people

The finding that 57 per cent favour and 43 per cent oppose default reflects a growing view among policymakers and opinion formers that the State simply cannot support the debt burden it has taken on.

The telephone poll of 500 people nationwide has also found that a majority of around two-thirds opposes the headline measures in the Government's four-year plan.
...
As Ireland awaited the fine details of the international bailout, which are expected tonight, it was learned last night that the Irish delegation negotiating with the EU-IMF last week raised the issue of default.

"The Europeans went completely mad," a senior government source said.

...
If Ireland is forced to default, there is a view that it should happen after the financial system has been restabilised, reformed and restructured, so that it can absorb the losses without the risk of meltdown.
...
In Dublin, there is barely concealed outrage at the interventions of Ms Merkel and at the position adopted recently by the European Central Bank, which precipitated the arrival of the EU-IMF team in Ireland.

"The ECB f**ked us," one government official in Dublin was reported yesterday to have said.

With calls for a bailout of Portugal intensifying and worries about Spain, Italy and even Belgium{A new TFTA in queue} growing, the German Chancellor is keen to show her domestic audience that once the febrile mood is calmed, there will be an orderly mechanism for dealing with a repeat situation.

Democracy is supposed to reflect the will of the people. But when it comes to bankers, it doesn't matter what people want. Making sure that Ireland doesn't default is not the need of Irish people, but that of the Europeans.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 29 Nov 2010 11:12

shyam wrote:Default! Say the people

Democracy is supposed to reflect the will of the people. But when it comes to bankers, it doesn't matter what people want. Making sure that Ireland doesn't default is not the need of Irish people, but that of the Europeans.

This is not about democracy. It is about stable system not defaulting to chaos and social unrest such as seen in Greece.
One should be careful of this 'democracy'. It about a system when there is social order and stability and will lose its meaning when there is anarchy and breakdown.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 29 Nov 2010 11:18

Whose social stability? According to the report, Irish leaders are not totally opposed to default.

Olli Rehn: No Haircuts For Senior Bondholders
So here is the Irish bailout in a nutshell: senior bondholders impairment: zero; Irish pensioners impairment: about 100%.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Dileep » 29 Nov 2010 12:05

Let me ask a stoopid question to the D&G gurus here. Is there an economy that is not going to tank in the mid-term future, where you can send your dallahs?

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 29 Nov 2010 12:25

Looking at the actions of respective governments, I think British pound will retain its value. Keep some in gold and silver too.
Last edited by shyam on 29 Nov 2010 12:26, edited 1 time in total.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Christopher Sidor » 29 Nov 2010 12:26

shyam wrote:Regarding Sidor's post here viewtopic.php?p=985665#p985665

There is a fundamental flaw in the argument. Ireland has to cut budget even if it takes bail out. But if it defaults, it doesn't have to pay back big chunk of the debt it owes now. It will also gain freedom to print its own money and to control fiscal policies.

Default and debt write-off or debt waiver should not be confused. Each Debt has to be serviced. Just because a country defaults, does not mean that it will not pay its debt or is free from the obligation to pay. Rather in case of a default, the debt then goes for rescheduling. This entails
1) a reduction of debt interest or
2) elongation of the debt repayment period,
3) reduction of the principal amount that has to be paid back
It is possible that a combination of these 3 options is applied.
For example Pakistan is asking for Debt-waiver or write off and not debt rescheduling. Till now all of its lenders are willing to do is debt rescheduling. Whether Pakistan's lenders will do so is an unanswered question as of today.

A country defaulting on its debt has a nightmare before it. It might get locked out of international capital markets all together for a significant amount of time. And since sovereign debt is generally in billions of dollars, the impact on lenders is also great.

One of the point I was making was, that even if Ireland Defaults, it will still have to cuts is budget. This is because it does not have the revenue to finance its current level of expenditure. As it has taken the bailout money, it will still cut its budget. So any way we look at it, its budget will have to be cut.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 29 Nov 2010 12:38

In the case of Ireland, unaccounted government spending was not the issue. The crisis came from private banks. Even today, Irish government has more money at hand, and if they default now, that money will last longer.

Bail out does not come free. It gets that bail out money at higher interest rate than its original loan. If you look at the total payments, it has to pay full original loan, new loan with additional interest, in addition to huge budget cuts imposed on them. When it defaults, amount it has to pay comes down.

BTW, there are two nations, Russia and Argentina, who have succesfully defaulted, and they now feel that they made the right decision. True, when a nation defaults it gets a huge crisis to handle. But when it has right leadership, countries have shown that they can handle it.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ShivaS » 29 Nov 2010 18:28

Dileep Saar

Diverify Diversify Diversify is the mantra

Keep 30% cash (or safe near cash like) instruments, Silver, Gold a little real estate..

IMHO

I paid 48 Lakhs for a 3 Beed room apartment near Chirec International school in HYerabad (Gutchibowli) straight 28 Lakhs in Black money no receipt no nothing, took ut 401 K loan

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 30 Nov 2010 02:34

Looks like the old chant of consumer spending is not working its earlier magic for two reasons:
- Consumer spending ~70% of GDP while accurate, masks the reality that atleast 50% of it goes abroad due to globalisation and helps PRC mainly
- The banks are so entangled in foreign debt scams that its the health of those foreign countries that drives the markets. Every time a postage stamp sized EU country catches cold, its the Dow that sneezes.

Looks like till all the debt mess is cleared and a few banks are allowed to fail there wont be any return to sanity.

BTW, my friend says even now (2010) his bank lost his original papers for the mortgage!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 30 Nov 2010 03:36

prad, have you seen any stuff about the post SU Russia or the East Europe and how they coped?

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby abhischekcc » 30 Nov 2010 09:54

prad wrote:^^^ it's all about debt. countries need to default. and that includes the US. there is no way that the US can pay back all the debt that it has accumulated. default, and restructure the financial systems and start anew.


There is a third alternative to default (which would throw Global economy out of the loop) and pay back of debt (which would throw US economy out of the loop). It is to allow foreigners (primarily Japanese and Chinese) to buy large parts of the US economy. It would keep the value of the dollar and honour its debt obligations as well.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Airavat » 30 Nov 2010 10:36

Mexico's link to Europe's debt troubles

Mexico is “much more exposed” to Europe’s debt troubles than countries such as Brazil, because Spanish companies hold 34 percent of the banking assets in the country, BNP Paribas said in a Nov. 22 report, citing data compiled from the central bank. Mexico’s peso held at the lowest level in a month on speculation that Ireland’s financial rescue package won’t stop the continent’s sovereign debt problems from spreading to Portugal and Spain.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ShivaS » 30 Nov 2010 19:11

Notice how Dollar is getting stronger, eventhough QE2 should have diluted its value,
As I have been harping Its relative, euro is going down therefore Dollar goes up.. Its not the intrensic strength of dollar...
Irony again Panda wins meanwhile Germany will lose in the long run ( But the dollar ise may help its exports)

Its time for Germany to t
go theBritish way and revive the German Mark as an alternative to DOllar

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 01 Dec 2010 00:33

Spain is the PIIGS to watch:

Spain to watch

The article ignores Spain's involvement in Mexican and Latin American banks

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Hari Seldon » 01 Dec 2010 07:10

Ilargi@TAE uvacha

The Irish situation serves as but one additional reminder where the true power in our societies resides: with the banks and their major stockholders. While the people of Ireland are not blameless when it comes to their predicaments, they are just one of multiple parties that should share the blame. And that’s not happening: the institutions that supplied the funds that enabled Irish housing prices to rise 10 or 15 fold in just a few years time are once again being made whole at the expense of an entire people, their social structures, their pension systems, and even their basic needs.

{Neo-colonism only. What Sweden tried to do to Latvia recently - cut all welfare progs including child health progs to better repay swedish kronor debt the Latvians had mistakenly splurged on in good times a few yrs ago}

Every single bail-out we've witnessed since 2007 carries that same signature. And there is one thing besides the political power structure prevalent in the entire western world that people should take away from this. That is that the financial situation of the major banks, the same ones who have such a firm grip on power, is much worse than most realize.

That is to say that normal debt restructuring, the kind that has been de rigueur throughout modern history, and that many voices are presently clamoring for, can and will not be used today because it would directly and immediately mean the end of many if not most if not all of the main banking institutions.

More ominously, there is another aspect to this: it's not just the banks that are much poorer than we know or think. The same holds true for our governments, our insurance companies, our pension funds and last but not least for ourselves. If we would mark all assets to market, we ourselves would be marked down enormously, make no mistake. In a world where 95%+ of the money supply consists of credit, and where credit is seizing up, you don’t have to be a math genius to figure out what happens when it evaporatesalmost entirely.


OMG. Freakin' devastating prose only. Scary many a time when folks as smart as this duo say stuff with such severe seriousness only. Even the 1% chance they're half right entails mass disruption on a scale only the WW2 gen has known in real measure.

The people of Ireland have been forced into a bail-out that's approximately $130 billion US large. There are 4.5 million people in Eire. $30,000 for every man woman and child has been added to Ireland's already monstrous debt levels at the stroke of a pen. Over which they will be forced to pay 5.8% in interest.

While Wall Street banks can still borrow money (well, make that credit) from the Federal Reserve at 0.25% or thereabouts. Nice job if you can get it.... Why not loan the "money" (let's not get into semantics) to Ireland at the 0.25% rate? Or to the American people themselves? Why do many Americans pay 10-20-30% interest on their credit card debt to the very same banks who at the very same time borrow at a rate that's some 100 times smaller? How mad is that? Why is that seen as somehow normal?

Is it because there is a moral idea that those who rack up debt deserve to pay dearly for doing so? Well, if such an idea exists, it's apparently applicable to some, but not to others. Because the one and only justification provided as the reason that Wall Street's finest have access to the ultra low rates, is that they racked up enormous debts.


Oh, read it all.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ShivaS » 01 Dec 2010 08:40

Russia coped by selling Gold, Oil and disinvestment of PSU ( Just ilike what is happening in India PSUs Coal India the most recent one)


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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Hari Seldon » 01 Dec 2010 19:04

European Crisis Spreads to Core as Belgian Bond Yields Surge

Europe’s sovereign crisis is spreading to the heart of the 16-nation bloc as investors question Belgium’s ability to cut the euro region’s third-highest debt load, overshadowing its economic performance.

The extra yield investors demand to hold Belgian 10-year bonds instead of benchmark German bunds of similar maturity widened to 139 basis points at 5.10 p.m. yesterday in Brussels, the most since at least 1993. The cost of insuring Belgian government bonds rose to a record for a second day, according to CMA prices of credit-default swaps.

The European Union’s 85 billion-euro ($111 billion) rescue package for Ireland has failed to quell market turmoil as investors shift their focus from peripheral states to countries such as Belgium, whose capital is home to the EU’s political institutions. While the country’s economy has been among the region’s growth drivers this year, inconclusive elections left it without a government, raising concerns on its budget outlook.

“Belgium has moved to the foreground as investors ask themselves ‘who’s next?’ to ask for help,” said Carsten Brzeski, an economist at ING Groep NV in Brussels and a former European Commission official.


So the 'EU periphery' is passe, eh? Its core now. jai ho. Mish puts it excellently here:
Swaps are soaring in Ireland, Portugal, Spain, Greece, and now Belgium. The market has correctly figured out there will be haircuts on senior bank debts. The problem is the ECB wants a free lunch but no haircuts until 2013, hoping of course the need for haircuts goes away in a few years.

Central bankers cannot and will not win this battle of nerves. The market is bigger than the Central bank.

Amen. But try telling that to these geezers here...
[French central bank guv] Christian Noyer said "As far as I'm concerned, I exclude that there will be haircuts in the future".

[ECB prez] Jean-Claude Trichet warned German Chancellor Angela Merkel not to "unsettle bondholders".

:rotfl:

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Prem » 02 Dec 2010 01:08

http://www.businessinsider.com/china-bl ... on-2010-12
China Blames Its Stock Market Plunge On An Unnamed International Bank
China is now blaming an unnamed international investment bank for the plunging Shanghai Composite, according to Caixin. Mouthpiece publication People's Daily published a commentary today from Professor Shi Jianxun that accused an international bank of emailing investors and telling them to sell.China's Securities Regulatory Commission had already started a probe into market manipulation after the Shanghai Composite Index fell 5.16 percent in one day. Shanghai is down 11 percent over the past three weeks.
http://www.businessinsider.com/china-bl ... z16tO7dcuE

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby SwamyG » 02 Dec 2010 03:29

http://www.thehindu.com/opinion/lead/ar ... epage=true

By the 4th century B.C., Asia had begun its first cycle of economic growth and power. This was the reason why Alexander the Great decided to travel eastward to establish an empire. At that time there was nothing worthwhile to the west of Greece. On the other hand, to the east of Greece was Persia, and beyond Persia were rich kingdoms in India and China. A Roman Emperor once complained that Rome had to import all its luxuries from India and China, but had, in turn, nothing to offer these Asian countries. In fact, until the 1820s, Asia accounted for 60 to 75 per cent of the world's Gross Domestic Product.

Asia is not a continent that can be brought together like the European Union. Historically, culturally and climatically, it falls into five distinct categories: East Asia, Indo-China, Central Asia, the Indian Ocean and West Asia regions. In the past, these regions were all integrated by the Silk Route. This is why I have titled this speech “The Return of the Asians” — because contrary to common opinion, what we are witnessing today is not the rise of Asia but the return of the Asian countries to recapture the global economy.

The first cycle of Asian dominance was crushed, above all by the rampant forces of European colonialism, and then by the Industrial Revolution which led European manufacturers to look to Asian markets for their manufactured goods. Thereafter, for the greater part of the 19th and 20th centuries, Asia was turned into a captive market for European industry. No Asian country other than Japan benefited from the Industrial Revolution. As a result, by 1940, Asia accounted for only 20 per cent of the world's GDP.

In a reversal of fortunes, however, the affluent western consumers of the 1970s enabled Japan and the four Asian Tiger economies — South Korea, Singapore, Malaysia and Taiwan — to emerge as low-wage manufacturing bases for consumer goods. The story of the return of the Asians begins here. The next phase was in 1979; the year which ushered in the Thatcherite revolution. I remember listening to Margaret Thatcher at the Commonwealth Summit of 1979 explaining her policies for promoting economic competitiveness. That same year, Jiang Zemin, who succeeded Deng Xiaoping, visited Singapore and Sri Lanka to study free trade zones there. That visit paved the way for the creation of special economic zones in China. This was the start of the migration of industries to China as many firms decided to relocate in China in order to remain competitive. Thereafter, China became the workshop of the world. China, which produced barely a few thousand air-conditioners in 1978, today manufactures nearly 50 million air-conditioners. In addition, half of the world's microwave ovens, one-third of its television sets, 70 per cent of its toys and 60 per cent of its bicycles are manufactured in China. Chinese exports in 2005 was worth $1.15 trillion.

Watching a television programme on the Shanghai Expo a few weeks ago I was reminded of my visit to Shanghai in 1979. Today the Mao jackets have been replaced by designer styles and labels. Global hotel chains have sprung up in Shanghai. The teeming bicycles and Red Flag cars have been traded for international car brands — and they are manufactured in China. There are ultramodern airports and ingeniously-designed expressways. And Pudong — which was a swamp at the time — has become a futuristic city.

In 1992, I visited New Delhi just as India was awakening from its economic slumber. Prime Minister Narasimha Rao and Finance Minister Manmohan Singh had just announced an economic re-structuring programme that ended India's socialist economy. The collapse of the Soviet Union had left them with no other option. At that time, Bangalore was for us a holiday destination. And Hyderabad was famous for its biryani. I met with the Tatas who were preparing a new strategy to face liberalisation. Companies such as Reliance, Wipro and Infosys were just starting out. Indians proudly informed me that they had earned $200 million from IT exports. Today, as much as China is the centre of global manufacturing, India has become the international hub for global service industries. India's IT and outsourcing exports amount to over $40 billion. The economic resurgence of China and India has also paved the way for the emergence of Thailand, Indonesia, Pakistan and Vietnam as manufacturing bases.

This shift of world economic power from the West back to Asia is highlighted in the Asian Development Bank Key Indicators (for Asia and the Pacific) for 2010. Today, the Asia-Pacific accounts for 36 per cent of the world economy. Europe comes second, and North America, third. Within Asia, over 65 per cent of the GDP comes from three countries — China, India and Japan. It is predicted that Asia will be the main driver of global growth over the next two decades with a newly emerging Asian middle class of nearly 1.5 billion. Since 1980, some 400 million Chinese people have transcended the poverty line. By 2030 the Chinese middle class is expected to exceed 600 million. In number terms this will be the largest middle-class group in the world, comprising the world's third largest consumer market. India will be the fifth largest market in the world with 520 million consumers. It is this demographic transformation of 1.5 billion Asian middle-class consumers that will fuel global economic growth.

This trend has been evident during my visits to India over the last two years. There has been a channelling of new products specifically aimed at the Indian low-income domestic market by Indian entrepreneurs. The best example of this is the Nano car that costs around Rs.1 lakh, which targets the lower middle class. It is the Indian version of Ford's Model T.

This is what I call the return of the Asians. The Asia of 2050 will be similar to the Asia of the mid-17th century which dominated the world in terms of total wealth — what we call GDP today — despite the fact that some of the European countries had a higher per capita GDP. Similarly, by 2050, most of Asia will be middle-income economies while the West will constitute high-income economies.

However, the return of the Asians will not be an automatic phenomenon. Nor can it be allowed to be confined to economic growth. The success of the region depends on correct political decisions and appropriate action being taken by governments and civil society — if it is not to be a flash in the pan. In the remaining part of my speech I propose to speak on the key issues that will require our attention in the years to come.

At one time the regions of the Indian Ocean were the richest in the world — even richer than East Asia. This was what compelled Elizabeth I of England to send an ambassador to the court of the Mughal Emperor Akbar the Great in the 16th century. The wealth of the Nizam of Hyderabad in the 19th century (valued according to the present day) will be $200 billion, four times the wealth of Bill Gates.

Once the sailors had mastered the Asian monsoons, the merchants wove a web of trade across the seas. It was a maritime crossroads bringing together traders from the Mediterranean, Arabia, South Asia and China. The kingdoms of South India, Sri Lanka and Sri Wijaya rose to prominence due to two reasons. One reason was merchandise exports. The second was the fact that they were the centres for trans-shipment from the East to the West.

By 2030, not only will India become the world's third largest economy, it will also be the world's fastest-growing major economy. Indonesia, the successor to Sri Wijaya, will become the fifth largest economy, overtaking Russia. By then the combined GDP of India and Indonesia will be $39 trillion — the same as the predictions for the U.S. during this time. Add to this the fast-growing economies of Pakistan, Bangladesh, Malaysia, Tanzania, Mozambique and Uganda on the one hand, together with the Gulf oil economies, Singapore, Brunei, Iran, Myanmar, South Africa, Kenya and Australia, and you have a cocktail of rapid growth.

Unlike East Asia and the Pacific which has APEC (Asia-Pacific Economic Cooperation), the Indian Ocean has no regional mechanism for trade and economic cooperation. The Indian Ocean Rim Association for Regional Cooperation (IOR-ARC) has been a non-starter. This is a serious omission since the potential for growth in the second half of the century lies in this region. One reason for this is the predicted increase in its population — an additional 500 million by 2050. Furthermore, the lower income levels of the Indian Ocean region gives a natural advantage to Indian enterprises that have already commenced designing low-price products and services to reach lower-income rural consumers. The Asian Development Bank calls this response in production to low-income demands ‘frugal innovations', and foretells its prospects of reaching East African coasts, thereby creating new trade linkages.

Given such exciting possibilities, it is time that the South Asian Association for Regional Cooperation (SAARC), the Association of Southeast Asian Nations (ASEAN), the Organisation of African Unity (OAU), and the Commonwealth that has 19 members in the region, initiate discussions to seriously consider this new alignment of trading nations, and create a formal mechanism to bring together Africa, Asia and Australia, the three continents that border the Indian Ocean. Those of you who are part of civil society can make people-to-people contact within this region and thereby complement regional level economic cooperation. Rotary International should take the lead in bridging the continents of the Indian Ocean.

This is the first part of the text of a speech made by Sri Lanka's Leader of the Opposition and former Prime Minister, Ranil Wickremesinghe, at the South Asia conference of the Rotary International in Bangkok on November 27.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Hari Seldon » 02 Dec 2010 05:13

The more I learn about the Irish tragedy, the sadder I am having learned only recently of the travails of a recently colonized people from whose stock I come.

Ireland's Debt Servitude

Stripped to its essentials, the €85bn package imposed on Ireland by the Eurogroup and the European Central Bank is a bail-out for improvident British, German, Dutch, and Belgian bankers and creditors. The Irish taxpayers carry the full burden, and deplete what remains of their reserve pension fund to cover a quarter of the cost.

This arrangement – I am not going to grace it with the term deal – was announced in Brussels before the elected Taoiseach of Ireland had been able to tell his own people what their fate would be. ...

One can see why the EU authorities reacted so vehemently. Such a move at this delicate juncture would have set off an even more dramatic chain reaction in the EMU debt markets than the one we are already seeing. It is harder to justify why the Irish should pay the entire price for upholding the European banking system, and why they should accept ruinous terms.


The last question, namely "why should the Irish people accept the current terms?" is not asked lightly. Its no secret that defaulting on such debt will be painful. However, consider the alternative....
As Citigroup said in a note today, the EU part of the package will come at around 7pc — higher than the fee paid by Greece. This is penal. By 2014, interest payments on Ireland’s public debt (then 120pc of GDP) will be €10bn, while tax revenues will be €36bn. This ratio is well above the average default trigger of 22pc, as calculated in a Moody’s study.

Nominal Irish GNP has contracted by 26pc since the peak.

It is nominal, not real, that matters for debt dynamics. Ireland is in a classic debt-deflation trap , as described by Irving Fisher in his 1933 Economica paper.


And what exactly is the choice here?
The question is, should the Dail vote against the austerity budget on December 7, Pearl Harbour Day. And should the next government – with Sinn Fein in the coalition? – tell the EU to go to Hell, do an Iceland, wash its hands of the banks, and carry out a unilateral default on senior debt by refusing to extend the guarantee?


And in case folks mistake this screed to be in support of irresponsible debtor behavior, consider this:
... there is a score to settle. Did the EU not disregard the Irish `No’ to Lisbon, just as it disregarded the first Irish `No’ to Nice? Did it not trample all over Irish democracy?


Hence, as AEP aptly puts it:
The risks are huge, but then the provocations are also huge.


if Eamon De Valera could defy world opinion in 1945 by sending condolences to Germany for the death of the Fuhrer, today’s leaders need not worry too much about scandalizing those who made them swallow Lisbon. Compliance is traumatic. Default is traumatic. What the Irish have before them is a political choice about what they wish to be as a people, and a nation.

Let me finish with a few words by Dan O’Brien, the Economics Editor of the Irish Times, that caught my eye.

"Nothing quite symbolised this State’s loss of sovereignty than the press conference at which the ECB man spoke along with two IMF men and a European Commission official. It was held in the Government press centre beneath the Taoiseach’s office. I am a xenophile and cosmopolitan by nature, but to see foreign technocrats take over the very heart of the apparatus of this State to tell the media how the State will be run into the foreseeable future caused a sickening feeling in the pit of my stomach."

My sympathies.


Mine too. Arise and fight back, ye celtic tigers! Shove your unglees up pert oiroles for a change .... my hopes and prayers are with the oppressed and the neo-colonized.....as always.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Satya_anveshi » 02 Dec 2010 06:55

Hari Seldon wrote:The more I learn about the Irish tragedy, the sadder I am having learned only recently of the travails of a recently colonized people from whose stock I come.


Hari Garu, No such comparison is apt IMO. they got the stuff (infra and luxury when they have zilch capability to sustain by themselves anyway) and now they are asked to pay. Their taking on the debt levels was voluntary and taken at their own descretion.

What happened to us was a mob rape with vitals organs left disfunctional. I hope we never let this happen again but...


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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby vic » 02 Dec 2010 11:24

IreLand has been conquered and made to pay tribute (in form of penal interest) to foreign masters, without even a token war!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 02 Dec 2010 11:49

The irony is that they have the power to break the powers but just not capable of doing it. A tiny country like Iceland has showed what to do.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Tanaji » 02 Dec 2010 21:13

http://www.rediff.com/business/slide-sh ... 101202.htm

Fake gold hits HK bourses

There have been reports that some govt. bullion itself is fake. Who in their right mind will trust Gold ETFs ? Thats a scam waiting to happen... I wouldnt touch that product myself.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Singha » 03 Dec 2010 08:17

Irish will cope as they always do - by emigrating to US, Canada, NZ and Australia. with only 4 mil total population if 500K able bodied adults are able to seek a new life elsewhere, their remittances will be able to support the elderly parents left behind or younger siblings still in school/college. ofcourse Govt funded infra and spit n polish will fade away but with the young going away enmasse there is not much need for it....a few of the young will remain to service the tourism industry.

likewise Iceland has a small population.

but countries like portugal, spain and greece are a bit too large and not anglo enough to use that escape route. Spain atleast has a lot of serviceable exports in agriculture and industry - I am unaware of what niches in the global economy are occupied by greece and portugal except perhaps tourism and olive oil!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Hari Seldon » 03 Dec 2010 09:43

The ever-perspicacious Lee Kuan Yew (He's still around and writing at that!) in Forbes on China's Rise: A Shift in Global Influence

Essentially calls for a US/Asean/India FTA to counter PRC.

During the last three decades China's economy has grown at the phenomenal rate of 10% per year, sometimes even exceeding 12%. Can China maintain such high rates for at least another decade? I think it can. China is starting from a lower base, and its 1.3 billion domestic consumers will keep rates up because their disposable incomes are growing.

As its GDP has increased, China has become more assertive regarding international issues. Those countries on its periphery--Korea, Japan, Taiwan and the ten Asean countries (Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam)--have felt China's growing influence. When these states make policy decisions they now have to take China into account. There is no direct intimidation,{yet, you mean} but, by denying access to its huge consumer market, China can punish those who are against its interests. Therefore, none of these countries wants to be viewed as antagonistic. Increasingly, this same pressure is being felt worldwide: The balance of power has changed.


Singapore has a special relationship with China. We are 75% Chinese. As our second language is Chinese, it is taught in our schools. Thus we share an ease in communication, which has been a factor in about 3,500 Chinese companies deciding to base their operations in Singapore--155 of which are listed on the Singapore Exchange. From Singapore the Chinese are able to study the region and eventually enter the markets of Malaysia, Indonesia, the Philippines, Thailand and Myanmar. Because Singaporean Chinese speak Mandarin, our businessmen, when investing in China, have found it easy to integrate China's workers with ours. But lest Singapore--or any other country in the area--forget that it is a smaller and younger country, Chinese officials obliquely remind ours that their written history goes back 5,000 years to 3000 B.C., leaving unspoken the question: "How old is your country?"


Eh, what's stopping PRC from making residual claims on historical/ethnic basis on s'pore next, eh?

China is a political and economic power the region cannot ignore. But neither, indeed, can China ignore the U.S. Although it has a smaller population--310 million versus China's 1.3 billion--the purchasing power of Americans is many times that of the Chinese. There is still time for the U.S. to counter China's attraction by instituting a free-trade agreement with other countries in the region. This would prevent these countries from having an excessive dependence on China's market.
Unfortunately the U.S. Congress is against any new free-trade agreements. If the next Congress continues to oppose FTAs, valuable time will be lost, and it may be too late to try again.


Well, fat chance something's gonna happen with this or any US kangress for that matter. NAFTA still bites deep.

A considerable counterbalancing force would be to add India to the mix. Whether India would be willing to enter into an FTA with the U.S., Korea, Japan, Taiwan and the Asean nations is the question. Singapore has a free-trade agreement with India, but we are a small country, enjoy good relations with India and do not present a threat to either its export or import market. If India joined such an agreement the combined markets would be more than equal to the pull from China.


Well, well, wasn't it sri Lee who once, in a less guarded moment, let out that...(In all of Asia, and eventually the world)
India alone can look China in the eye.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 03 Dec 2010 09:48

Singha wrote:Irish will cope as they always do - by emigrating to US, Canada, NZ and Australia. with only 4 mil total population if 500K able bodied adults are able to seek a new life elsewhere, their remittances will be able to support the elderly parents left behind or younger siblings still in school/college. ofcourse Govt funded infra and spit n polish will fade away but with the young going away enmasse there is not much need for it....a few of the young will remain to service the tourism industry.

likewise Iceland has a small population.

but countries like portugal, spain and greece are a bit too large and not anglo enough to use that escape route. Spain atleast has a lot of serviceable exports in agriculture and industry - I am unaware of what niches in the global economy are occupied by greece and portugal except perhaps tourism and olive oil!



Any chance of hiring them in India for software?

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 03 Dec 2010 09:51

Hari, Such a FTA wont happen. More likely US will go after the minuscule Indian software business than the trillion $s imbalance with PRC.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby shyam » 03 Dec 2010 11:41

Why is Singapore (70% Chinese) afraid of PRC?

What is the fetish for huge internal consumer market of China? That can explode as predicted only if rest of the world start accepting Chinese wampum. Others can not export to China when they take every step to keep their currency down. It is an illusion created to make others dance according to PRC's tunes.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby JE Menon » 03 Dec 2010 16:22

No elite - however tiny - likes to cede control :)

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby svinayak » 03 Dec 2010 21:37

shyam wrote:Why is Singapore (70% Chinese) afraid of PRC?

What is the fetish for huge internal consumer market of China? That can explode as predicted only if rest of the world start accepting Chinese wampum. Others can not export to China when they take every step to keep their currency down. It is an illusion created to make others dance according to PRC's tunes.

These are US mandated practices. They are createing a G2 world. Sing will follow the G2 world.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 03 Dec 2010 23:49

The Irish are getting shafted again like in the Potato famine. Irish eyse are crying now.

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby Satya_anveshi » 04 Dec 2010 00:02

What austerity??? Obama, the god of all things, has still one last role left for this year...playing Jesus and/or Santa Clause and that will come in the form of extending Tax cuts for rich and paying unemployment for the poor.

Europeans can talk about austerity because that is really what they need. US does not have to go into that...it spends 30% on Defence and all sorts of $hitty things that came about in Wikileaks. Imagine us folks paying 30% of our salaries on life insurance premiums and we contemplate on cutting a meal or two but keep paying the same absurd premiums. It is amazing these folks contemplating on cutting social security of the folks who have contributed all their lives, cutting unemployment for the jobless but not even a pipsqueak about cutting the massive defence spending.

The mafia has USG by the balls and I completely echo Shiv garu's sentiments in other thread....US model is broken..all its institutions have lost their ability to do net good (good minus all the crap that comes) to the general population...banking, insurance, healthcare, fourth estate, transportation, security related institutions yada yada..you name it and it will stink. Jai Ho!

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Re: Perspectives on the global economic meltdown- (Nov 28 20

Postby ramana » 04 Dec 2010 04:30

Lee Kuan Yew sees the inexorable draw or gravitational pull of the PRC economy. What he is saying is the creation of giant economic blob with PRC. Despite his Chinese origins he doesn't want to be part of that economic blob. He sees the other giant economic blob as US. The US run econ blob is much bigger even if demographically weaker. (As an aside if it weren't for US immigration it would be much smaller!)

Yew wants to merge the US econ blob with the Indian demographic blob to create a duality. However he ignores the fact that the Chinese blob depends on the US econ blob for its sustenance. And US policies are to sustain G-2.

The Brits built on the Indian Ocean trading system which is an Indian run trading system. Industrial revolution changed the dynamics and made interanl consumption greater than trading in the 19th century. The US started industrialization in late 19th century andsurged ahead such tat it took over the leadership from the British system. It is still a consumption system and survives on cheap goods from China. So lee Kuan Yew's advice even if its rational will not be implemented for G-2 are Saimese twins or Janus faced. They cannot survive if they are de-coupled.


India needs to revive the Indian Ocean trading system and revive the British Empire trading system to create India wealth as acharya said elsewhere. The GOI intiative to create a Commonwealth Free Trade Zone is a step in the direction. Also to transform the Commonwealth relationship there is a need for rotating the Commonwealth head among the Commonwealth Heads of State in order for the group to feel valued and not get poached by tempting offers from either of the two blobs...


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