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

[shyam]

TFTA log nanga hai kya?

Australia too sold off major part of gold reserves near price bottom

[shyam]

If this is true, UK population is waiting for disaster.

Credit cards used to pay mortgage or rent by 2 million people

[Hari Seldon]

^^^Oh, its true all right. Seems to me duniya mein sabhi nange hain. But then, like raj kumar says in one of his films "neeche girne ka dar usi ko hota hai jo oonchai par hota hai" (Fear of falling affects only the high and mighty). We SDREs have always been swimming naked only, so no surprise there, I guess.

[shyam]

Sorry to disagree... GoI or Indians did not sell gold thinking that they are worthless. I don't know anybody in India paying mortgage through credit card. We are not wealthy... well.. if we subtract debt from the wealth of country/people, we may be wealthier than many of the wealthy people out there today.

[Hari Seldon]

^^^ Aaah, shyam, so now you have to preach to the choir, eh? Theek hai, go ahead.

There are significant hurdles in our path - food security, energy security and water security being the biggest. The formerly wealthy TFTA can still do untold damage on all 3 fronts, which is why it is not wise to advertise our skin-colored swimming trunks just yet.

[shyam]

aah... for a moment I didn't think about it. Let me go and sleep.

[Hari Seldon]

NYT finally lets out in rather melodramatic fashion what everyone suspected anyway - the actual mechanics of execution and the men and machines behind QE2.

The Fed’s QE2 Traders, Buying Bonds by the Billions

Deep inside the Federal Reserve Bank of New York, the $600 billion man is fast at work.

In a spare, government-issue office in Lower Manhattan, behind a bank of cubicles and a scruffy copy machine, Josh Frost and a band of market specialists are making the Fed’s ultimate Wall Street trade. They are buying hundreds of billions of dollars of United States Treasury securities on the open market in a controversial attempt to keep interest rates low and, in the process, revive the economy.

To critics, it is a Hail Mary play — an admission that the economy’s persistent weakness has all but exhausted the central bank’s powers and tested the limits of its policy making. Around the world, some warn the unusual strategy will weaken the dollar and lead to crippling inflation. But inside the Operations Room, on the ninth floor of the New York Fed’s fortresslike headquarters, there is no time for second-guessing. Here the second round of what is known as quantitative easing — QE2, as it is called on Wall Street — is being put into practice almost daily by the central bank’s powerful New York arm.

Each morning Mr. Frost and his team face a formidable task: they must try to buy Treasuries at the best possible price from the savviest bond traders in the business. The smallest miscalculation, a few one-hundredths of a percentage point here or there, could unsettle the markets and cost taxpayers dearly. It could also embolden critics at home and abroad who say QE2 represents a dangerous expansion of the Fed’s role in the markets. "We are looking to get the best price we can for the taxpayer," said Mr. Frost, a buttoned-down 34-year-old in a striped suit and rimless glasses.

Whether Mr. Frost will reach that goal is uncertain. What is sure is that market interest rates have risen, rather than fallen, since the Fed embarked on the program in November. That is the opposite of what was supposed to happen, although rates might have been even higher without the Fed program. Mr. Frost’s task is to avoid paying top dollar for bonds that could be worth less when the Fed tries to sell them one day.

Reads like a racy thriller, eh? More Grisham or Cook than NYT, eh? Read it all.

[SwamyG]

PwC reports have been doing rounds in the news circle. All hunky dory projections for India by 2050 - hopefully my grand kids will enjoy the benefits. Dil toda bahut kush hua.

For folks, who like to read the report here it is. The link leads to a page that contains the download to a 25 page report.

In March 2006 we produced a report setting out projections for potential growth in GDP in 17 leading economies over the period to 2050. These projections were updated in March 2008 and we have now revisited them again in the aftermath of the global financial crisis, extended now to cover all G20 economies.
Our key conclusion is that the global financial crisis has further accelerated the shift in global economic power to the emerging economies.

Measured by GDP in purchasing power parity (PPP) terms, which adjusts for price level differences across countries, the largest E7 emerging economies seem likely to be bigger than the current G7 economies by 2020, and China seems likely to have overtaken the US by that date. India could also overtake the US by 2050 on this PPP basis.

If instead we look at GDP at market exchange rates (MERs), which does not correct for price differences across economies but may be more relevant for practical business purposes, then the overtaking process is slower but equally inexorable. The Chinese economy would still be likely to be larger than that of the US before 2035 and the E7 would overtake the G7 before 2040. India would be clearly the third largest economy in the world by 2050, well ahead of Japan and not too far behind the US on this MER basis.

Return to historical norm

In many ways this renewed dominance of China and India, with their much larger populations, is a return to the historical norm prior to the Industrial Revolution of the late 18th and 19th centuries that caused a shift in global economic power to Western Europe and the US – this temporary shift in power is now going into reverse.

This changing world order poses both challenges and opportunities for businesses in the current advanced economies. On the one hand, competition from emerging market multinationals will increase steadily over time and the latter will move up the value chain in manufacturing and some services (including financial services given the weakness of the Western banking system after the crisis).

Great new opportunities

Says report author John Hawksworth, head of macroeconomics at PwC: “At the same time, rapid growth in consumer markets in the major emerging economies associated with a fast growing middle class will provide great new opportunities for Western companies that can establish themselves in these markets. These will be highly competitive, so this is not an easy option – it requires long term investment – but without it Western companies will increasingly be playing in the slow lane of history if they continue to focus on markets in North America and Western Europe.”

This applies not least to the UK, which currently sells only around 7% of its exports to the BRICs (even including Hong Kong as part of China), about the same as it exports to Ireland at present. If the UK is to achieve trend growth of more than about 2% in the long run, then it needs to find a way to break into these fast-growing emerging markets on a much larger scale than achieved so far.

The accelerating shift of global economic power: challenges and opportunities

[Suraj]

It's unlikely to take until 2050 to overtake the US in PPP terms - we're already ~$4-4.2 trillion vs $14 trillion for them. Previous projections were for overtaking them in absolute dollar terms by 2050.

[Singha]

but what can UK sell to E7? USA, germany and japan can sell tons of cars, machinery, power plants, trains , electronics, defence goods, books, tools to E7 economies and indeed are doing so. other than discredited financial services & whisky what?

[svinayak]

These periods are too long for any serious projections. This a false expectation built here.

Demographic changes, wars, Oil shortages, food crisis are obstacles which the world has to face in the next 5 decades. Global trade may itself wind down and so this is laughable projections

[SwamyG]

Looking at the graphs and charts.....has confused me now. Reading the steady stream of D&G news pertaining to UK, one expects UK to collapse any moment like Pakistan If one looks at PwC projections, UK seems to be not sliding as far as GDP or economic growth. They will be clocking somewhere around 1-2% of growth. Point is they do not drop out of the chart or graphs. That is something for a power that is routinely written off by BRFites. I will try to pry out the chart from the report later today.

In 2050, India seems to be the outlier - positively speaking of course. Brazil has overtaken China....else pretty much almost all G7 and E7 countries are in the range of 1-4% of growth. Looks like that is the norm.

In terms of rosy steep GDP climb, looks like we have not seen really anything. If the predictions and graphs are to be believed, 2025 onwards the nation is posed to climb steeply. Yeah steeply. Historically, the projections are conservative or cautiously optimistic. If that is true, then India should see massive massive massive growth by 2020 give and take few years.

It is also predicted that the lifestyle of Indians in 2050 would be comparable to what South Koreans have now. Hey I will take that, it means people have something to look forward, no? In my books that is totally cool. I do not expect nor want streets with gold and silver coverings. Decent lifestyle for the majority is heart warming.

ps: I know the glass is half empty. Just saying.

[ramana]

Recall Shyam Saran's edict "Linear projection wont make a caterpillar into a butterfly!" So all projections beyond ten to twenty years are humbug. In 2000 who could have imagined the 2008 US financial meltdown? At that time US had a surplus!

Its like in numerical integration if step size is large the error propagates in a square manner. Remember Newton-Euler and Rung-Kutta methods where error analysis was very important. In these 50 year projections there are unknown events which we cant even envision.

So take this all with bucket of salt at same time instill boldness in the progeny to take advantage if it shows up.

[Hari Seldon]

My concern is that due to peakoil and such stuff, we might just reacha peak energy usage stage after which the living stds of the entire world stand to fall. So while the west made hay at least for a few generations, just when it was gonna be our chance to buy the ticket, the counter is gonna close only. Perhaps.
[OK, exagerrated concerns. Am hoping renewable sources and n-power are able to fill the gap that oil shortages will engender]

[Singha]

I dont think energy usage of the west is needed to lead a decent life. their living std should fall, E7 should rise, they will meet somewhere in between.

[Bade]

There is enough solar power (renewable) available to do continuous YearOverYear 10% growth for a few hundred years at a conservative 10% efficiency for conversion, before saturation for extraction sets in. So no worry there as long as the technology is in place.

Earth based Nuclear power is extra or in distant future all that one can mine elsewhere and beam energy down to earth.

[Neshant]

i doubt the various peak energy theories.

between coal, natural gas, oil and hydro-electric..etc there are tons of energy available.

the 'climate change' scam is designed to raise the cost of development on developing countries so they stay developing countries. Also a convenient trade barrier to use against developing countries.

[Hari Seldon]

Fair enough and heartening to know that we won't hit peak energy anytime soon. The per unit weight energy oil provides and the infra already built in its support are hindrances to a more orderly transition, perhaps. But that can be managed.

As long as energy is available, everything economic can be handled peacefully only, IMHO.

[shyam]

The peak oil theory is not necessarily that we are running out of sources of energy. It is that we may not economically get the required energy to sustain current living standards. Recent economic crisis just ensures that enough capital is not going to be available for future drilling and BP disaster will only make requirements for tougher safeguards. It is being argued that we need larger energy consumption to retain the current standard of living.

[Bade]

the 'climate change' scam is designed to raise the cost of development on developing countries so they stay developing countries. Also a convenient trade barrier to use against developing countries.

I would not go on a limb on that. It could be used as a trade barrier, well almost anything can be for that matter including terrorism. Many less developed agragrian setups have vanished primarily in the distant past due to climatic changes on short time scales of a few decades, when it becomes impossible to stay put it in one place for succeeding generations.

[Hari Seldon]

How 'em tables turn only, eh?

This time, the table turns out to be made in china only. Oirostani troubles elicit little sympathy in moi jingo heart, admittedly (karma coming collecting and all, basically), but am trying quite hard to be appropriately empathetic and all that.

Europe fears motives of Chinese super-creditor

ROFL only. The same oirostan that colonized the known world and brought the light of civilization, democracy, freedom and all that to oppressed turd world unwashed only, eh? Ensoi the schaudenfraude while it lasts a few fleeting moments. Soon, whole duniya will be engulfed inchaos and we'll be too busy to do the beer+popcorn thing.

The EU authorities fear that China's purpose in buying eurozone debt may be double-edged, intended to push up the euro exchange rate against the yuan and gain advantage for exports.

And gain leverage as well, to geopolitical ends. In case, anybody has forgotten, the IMF, ECB and Brussels have proven comprehensively in the cases of Ireland, Greece and soon Portugal that creditor interests overrule local government and public interest in indebted client states only.

China has emerged as the transforming force in the eurozone debt crisis over recent days, pledging to use part of its €2.87 trillion (£1.82 trillion) reserves to safeguard global stability. The question is whether the Communist regime is hoping to extract strategic concessions in exchange.

What dya think?

The footsteps of a giant creditor were clearly felt in Portugal's bond markets on Wednesday, and again on Thursday in Spain and Italy. Madrid sold €3bn of five-year debt at 4.54pc, a full percentage point jump from November but still below the danger level. Italy also enjoyed a benign auction.

The price for this largesse will be extracted, pound for pound, you can bet. One possibility is that the oirostani countries default and the CPC eat part of the resulting haircut. Wouldn't that be a shame, eh?

Charles Grant, head of the Centre for European Reform and author of a book on EU-China relations, said China's top goal is to secure an end to the EU arms embargo, imposed after the Tiananmen Square massacre in 1989. It rankles as humiliating treatment for a global superpower that has since changed profoundly.
see, unlike us clueless yindooze, cheena neither forgives nor forgets historical wrongs and humiliations only. May they carry this chip on their shoulder a long time ahead, jai hu!

The EU has refused to move on the sanctions until China ratifies the International Covenant of Civil and Political Rights, and China's arrest of Nobel peace dissident Liu Xiaobo has further complicated matters.

Yet Brussels has suddenly begun to shift gear. Baroness Ashton, the EU's foreign policy chief, said the embargo is damaging EU-China ties and called for new thinking to "design a way forward".

There, the oirostani jackals go about mounting their moral/huma rite high-horse. It's past time someone smacked sense into these oisoles only and PRC is best placed to do that on behalf of the hated 'east'.

China's second goal is to secure market economy status from the EU. This would make it much harder for the EU to impose anti-dumping measures against Chinese imports. As it happens, the EU has just lifted its punitive tariff on Chinese shoes.

Mr Grant said Beijing will not risk much cash to woo Europe. "They are very hard-nosed. They may splash some money around for goodwill but they are not going to waste the hundreds of billions that may be needed. Nothing short of meaningful action by Europe's leaders can genuinely stabilise the eurozone," he said.

"It is debatable whether China would actually be willing to become buyer of last resort of the debt of a country close to default," said Julian Jessop from Capital Economics. "Chinese officials are acutely aware of past losses and will not want to be seen to risk their peoples' capital on a lost cause. Their actions frequently fall short of expectations raised by their words."

See that last line? More insults & humiliation on the heavn-mandated middle kingdom, most highly soup-e-rear nation on earth only.

chalo, OK. that was good fun. Shall stop now.don't take things too seriously now, anyone. Consider disclaimer active only. ciao.

[Hari Seldon]

Kiyohiko G Nishimura: This time may truly be different – balance sheet adjustment under population ageing

BIS paper based on a speech. Must read, janta. Shall dissect with excerpts later sometime, maybe.

Speech by Mr Kiyohiko G Nishimura, Deputy Governor of the Bank of Japan, prepared for the panel “The Future of Monetary Policy” at the 2011 American Economic Association Annual Meeting, Denver, Colorado, 7 January 2011.

[SwamyG]

All projections should be taken with a pinch of salt. PwC in the reports talks about the caveats in its long term projections. It lists various points in this regard. Its earlier report on this was in March 2006. They evaluated it again in 2008 and now they have come with another set of reports on 2010/2011. Their projections 5 years before have not been wrong, that was before the meltdown; the meltdown actually has fastened the process.

Such long term projections can be used as trends by governments. No government would just rely on these; they would have certainly made their own projections. These projections can be compared and analyzed for similarities and differences.

Don't we individuals calculate our net worth, plan for our kids education, retirement ityadi? Governments would have exponentially more number of things to plan. So these projections are neither vedavak nor should one phoo-phoo them.

A lot can happen tomorrow, like a massive earthquake or tsunami killing thousands; or locusts killing all the rice varieties on this planet. But if one focuses only on these then on would miss out the outcome of the happy-path.

[SwamyG]

For people who want to track peak oil, energy and ityadi, please follow http://www.theoildrum.com/

[Neshant]

Many less developed agragrian setups have vanished primarily in the distant past due to climatic changes on short time scales of a few decades, when it becomes impossible to stay put it in one place for succeeding generations.

The climate change science looks like bunk to me. In the past there was no man made emissions.

The only reason the climate change scam is being pushed now is that developed countries need a trade barrier against developing countries. Did they only wake up to the idea of climate change after they had emitted themselves to prosperity.

Also note how the word 'global warming' has quietly been dropped and in its place came the word 'climate change'. The global warming stuff proved to be bunk as proof was required that the earth was warming up due to man made emissions. Now that the proof hasn't materialised, a change in terminology is used to perpetuate the scam. With 'climate change', if its rains, it can be blamed on climate change and if it does not rain, it can *also* be blamed on climate change. No proof required.

This kind of half baked science and cooking of the books as was going on at the University of East Anglia when they faked global warming data gives the entire climate change/global warming "science" the bad reputation it deserves.

Now that Goldman Sachs has got into the 'carbon trading scam' (a new scam), prices on everything will be raised despite the great recession. Its got everything to do with making money through paper scams rather than honest work and nothing to do with the environment.

[Bade]

So you will agree that trading is based on hope and fear, even that cannot be a science. Markets are just mass opinion driven actions, so it can never be free and fair either. So what is left of even free market economics that is not a scam.

[SwamyG]

Former World Bank President Sees “Swing Back To Asia”

Chris Barth: You have mentioned that the world is “moving toward Asia.” How do you see that transpiring?

James Wolfensohn: Well until the ’90s, the world was dominated by the United States, Europe, and Japan, who had 80% of the global GDP. By 2050, the probability is that 65% of the global GDP will be in Asia, which will consist of 45% to 50% in China and India and the rest in other countries in Asia. That is a monumental change. It last happened in 1815 and, before that, in the year 1500. But it has happened before, and there’s now a swing back to Asia that is very clear.

Barth: Is that something that you feel is just a natural swing, or is it something we should be concerned about?

Wolfensohn: I think it is because of the lack of competitiveness of the Western economies and the fact that the Asian economies seem to be doing better in terms of governance of their countries, research and implementation of new product design and new product development. They are just more competitive.

When that happens, typically the GDP of those countries increases. Every eight or nine years, the GDP of China has been doubling, so that it means in 25 years, it’ll be eight times what it is today. Those numbers just speak for themselves. India will follow, of course, but probably with a delay of another five to eight years before it gets on that path.

A quick look at the numbers reveals that Wolfensohn’s statements actually downplay the speed of Chinese GDP growth; indeed, the graph of China’s national GDP is quite staggering in its astronomical rise. India’s GDP has made remarkable gains in the past decade as well, although as Wolfensohn notes, it delays behind China.

[Neshant]

So you will agree that trading is based on hope and fear, even that cannot be a science. Markets are just mass opinion driven actions, so it can never be free and fair either. So what is left of even free market economics that is not a scam.

I don't see what the connection between the first and second sentence is.

As long as people are betting with their own money and eating their losses, there is no problem. They could use astrology for all I care. Its a free market.

The moment useless middlemen like banking & financing inserts itself into the equation by bribing politicians to create laws to skim money off the rest of society, its no longer a free market. Its a case of passing on their losses to suckers down the line and making a living through a parasitical existance rather than producing anything of value.

That con artists exists now in the present system is no excuse for saying they should continue to exist. Sort of like if your house is being burlarized by crooks doesn't mean you should sit back and do nothing.

IMO the first step starts with shutting down the scam of fiat money controlled by private entities primarily for their own benefit.

[svinayak]

All projections should be taken with a pinch of salt. PwC in the reports talks about the caveats in its long term projections. It lists various points in this regard. Its earlier report on this was in March 2006. They evaluated it again in 2008 and now they have come with another set of reports on 2010/2011. Their projections 5 years before have not been wrong, that was before the meltdown; the meltdown actually has fastened the process.

There is a motive behind such projections. They had no such projections 50 years ago talking about PRC like this.
This time it may be to remind the western population to cut down the asian economy or generate ideas to brining them down. "Indians are stealing jobs" slogan came from that same mentality.

[svinayak]

http://cravensbrothers.com/cboutlook/

The link BELOW provides to a site with 12 slide-simple drawings & figures explaining how we got here and possible scenarios. It is short,succinct and clear in addressing the issues of today.

[Bade]

The moment useless middlemen like banking & financing inserts itself into the equation by bribing politicians to create laws to skim money off the rest of society, its no longer a free market. Its a case of passing on their losses to suckers down the line and making a living through a parasitical existance rather than producing anything of value.

What if the majority wants exactly that, irrespective of what the minority who may share your opinion. You can stop investing your money in such markets.

Either way I do not see how money is made in stock market without some amount of scamming. I invest knowing fully well what the risks are in giving my money to someone else to invest in wisely. So the risk never goes away, irrespective of the nature of the system. The market always work on fear and hope, both of which can be manipulated even more easily these days. By investing in such a scheme we all are just willingly agreeing to be suckers, unless one can pull out with positive returns in the future just before a crash. Rest of all the economic gobble-gook is just that. More scam in the name of free market. I do not have a problem with that, like I do not have a problem with what people want to believe.

[Neshant]

What if the majority wants exactly that, irrespective of what the minority who may share your opinion.

I don't know how anyone can make a case that the majority want to be ripped off.

The reason fiat money, the federal reserve, banking crooks ..et al are cloaked in secrecy is to hide the fact that they live a parasitical existance off society's labor. A whole lot of textbooks and jive talk goes along with it to confuse and if not corrupt anyone who begins to see it for what it is - a fraud.

Most people are not *educated* enough to see this which is quite apart from wanting to get scammed. This means the only time the scam will become evident is when the problem has grown beyond all means to contain it - which it soon will. Then more of the above crap talkers will emerge with their 'easing this and loosening that' jive talk but by that time, with people seeing the destruction of their wealth and living standards, there will be no takers for that bull.

Either way I do not see how money is made in stock market without some amount of scamming. I invest knowing fully well what the risks are in giving my money to someone else to invest in wisely. So the risk never goes away, irrespective of the nature of the system.

I don't understand what you are talking about. If you invest your own hard earned money in a venture that goes south, that is your problem and that is the free market. If on the other hand you go burglarize someone's wealth who has no intent to invest in your venture, that is a scam. The present system of passing on losses to suckers via money printing, inflating, bailout hounding, rigging and scamming is the latter. There is nothing written in stone which says society should be scammed by criminals. Quite the opposite in fact.

[Hari Seldon]

Enfant terrible Gerald Celente at it again. Extreme D&G warning, of course.

Brace Yourself: Our Society Is Going To The Dogs

Its a short 5 min odd video. Recommended but cautious watch only.

In case you're obsessing about normal problems like your food being overcooked, your clothes not fitting quite right, or your kids not doing their homework, don't bother. Because soon, says trend-forecaster Gerald Celente publisher of The Trends Journal, you're going to have a lot more important things to worry about.

Such as a huge spike in crime, as towns and cities are forced to cut back on police enforcement to pare their massive budget deficits. And higher taxes, as the government tries to save its own skin by producing revenue any way it can. And a loss of liberty, as the government tries to preserve its own power by tracking every aspect of your life.

Fortunately, says Celente, civilization itself will not collapse. But it's going to get really bad for a while.

[Hari Seldon]

From ZH

NIA Comments On The Upcoming Bursting Of The (Bankruptcy Non-Dischargeable) College Debt Bubble

The National Inflation Association believes that the United States has a college education bubble that is set to burst beginning in mid-2011. This bursting bubble will have effects that are even more far-reaching than the bursting of the Real Estate bubble in 2006. College education could possibly be the largest scam in U.S. history.

{Ok. Exagerrations galore I can spot. Still, worth a read. Been yelling for quite a while abt the imminent bursting of the higher ed bubble. Time will tell if that call was right only }

NIA's advice to the youth of America today is to think for yourselves. Don't get suckered into overpaying for a college degree that is worthless because everyone else has one. College is only worth attending if you plan on actually learning something there. If you are only going to college because you think a piece of paper is going to help you find a job, you would be much better off skipping college and entering the workforce right now at any entry level job. Your experience will benefit you more than any piece of paper.

The median U.S. home price is currently $170,600, down 26% from its peak of $230,200 in July of 2006. The Dow Jones is currently 11,672, down 18% from its peak of 14,198 in October of 2007. Oil is currently $91 per barrel, down 38% from its peak of $147 per barrel in July of 2008. After the financial panic of 2008, the U.S. saw a collapse in the prices of just about all assets, goods, services, and commodities. Between lost stock market and home equity wealth, Americans lost $10.2 trillion in paper wealth in 2008, and have only recouped a fraction of it since then.

College is the only thing in America that never declined in price during the panic of 2008. It actually rose in price substantially. The annual tuition for a private four-year college was $21,235 in the 2005-2006 school year. Despite Real Estate beginning to collapse in late-2006, college tuition rose by 4.6% in the 2006-2007 school year to $22,218. Despite the stock market beginning to collapse in late-2007, college tuition rose by 6.7% in the 2007-2008 school year to $23,712. Despite oil and other commodities collapsing in late-2008, college tuition rose by 6.2% in the 2008-2009 school year to $25,177. Even after the Dow Jones crashed to a low in early-2009 of 6,469, college tuition still rose by 4.4% in the 2009-2010 school year to $26,273.

More hyperbole. College the *only* thing that didn't go down in the price crash of 2008? How about Gold? Or high-end healthcare, eh? Such loose assertions diminish credibility of the rest of the case built only, IMHO.

A more sober analysis from another source:
http://www.counterpunch.org/nasser01112 ... ebt Bubble

It was announced last summer that total student loan debt, at $830 billion, now exceeds total US credit card debt, itself bloated to the bubble level of $827 billion. And student loan debt is growing at the rate of $90 billion a year.

There are far fewer students than there are credit card holders. Could there be a student debt bubble at a time when college graduates' jobs and earnings prospects are as gloomy as they have been at any time since the Great Depression?

The data indicate that today's students are saddled with a burden similar to the one currently borne by their parents. Most of these parents have experienced decades of stagnating wages, and have only one asset, home equity. The housing meltdown has caused that resource either to disappear or to turn into a punishing debt load. The younger generation too appears to have mortgaged its future earnings in the form of student loan debt.

The most recent complete statistics cover 2008, when debt was held by 62 percent of students from public universities, 72 percent from private nonprofit schools, and a whopping 96 percent from private for-profit ("proprietary") schools.

For-profit school enrollment is growing faster than enrollment at public schools, and a growing percentage of students attending for-profit schools represent holders of debt likely to default. In order to get a better handle on the dynamics of student debt growth, it is helpful to sketch the connection between the current crisis in public education and the recent rapid growth of the for-profits.

Student defaults won't likely see bailouts anytime soon, IMHO. The poor sod students certainly won;t see any relief, the fed agencies giving out loans will perforce have to be bailed out by taxpayer or fed-imagined dollahs and everybody else gets nothing.

[SwamyG]

All projections should be taken with a pinch of salt. PwC in the reports talks about the caveats in its long term projections. It lists various points in this regard. Its earlier report on this was in March 2006. They evaluated it again in 2008 and now they have come with another set of reports on 2010/2011. Their projections 5 years before have not been wrong, that was before the meltdown; the meltdown actually has fastened the process.

There is a motive behind such projections. They had no such projections 50 years ago talking about PRC like this.
This time it may be to remind the western population to cut down the asian economy or generate ideas to brining them down. "Indians are stealing jobs" slogan came from that same mentality.

There are always some motive. If they did not have projections 50 years ago, it could mean they were not doing it for so many reasons. One could be that times have changed and financial institutions have evolved.

From a trend perspective, it is up to India to verify if the projected trends are achievable or just a mirage. I hope you don't think Indians are totally naive, and that only some of BRFites can think like no man on this planet.

One can look at these reports in the following ways:
1. Cite nefarious motivation and cry foul.
2. Cite nefarious motivation and handle the current and future situation.
3. Use the projections to verify our own projections.

It is so easy to see that their projections match some of the real progress in the country. If the trend continues, India is going to face challenges. Should we cry foul and ignore the harsh realities? Water is the single most important thing that is going to impact us. Next is food and energy.

[Hari Seldon]

^^^ I think Taleb mentions this in 'black swan'.

It was the advent of the spreadsheet that facilitated projectioneering wantonly only. And the powerpoint only made things worse. Only. Every tom dick and hari then jumped onto this game of projecting trendlines into the far future and copy-pasting fancy charts onto ppts only. The results we saw in the wall st wreckage in 2008.

[svinayak]

I hope you don't think Indians are totally naive, and that only some of BRFites can think like no man on this planet. Should we cry foul and ignore the harsh realities? Water is the single most important thing that is going to impact us. Next is food and energy.

Mine was a comment. and Just that. So maybe you have read my post into something else. OT. It is OK

[astal]

Deleted. Unrelated to topic. My apologies.

[Ambar]

Enfant terrible Gerald Celente at it again. Extreme D&G warning, of course.

Brace Yourself: Our Society Is Going To The Dogs

Its a short 5 min odd video. Recommended but cautious watch only.

In case you're obsessing about normal problems like your food being overcooked, your clothes not fitting quite right, or your kids not doing their homework, don't bother. Because soon, says trend-forecaster Gerald Celente publisher of The Trends Journal, you're going to have a lot more important things to worry about.

Such as a huge spike in crime, as towns and cities are forced to cut back on police enforcement to pare their massive budget deficits. And higher taxes, as the government tries to save its own skin by producing revenue any way it can. And a loss of liberty, as the government tries to preserve its own power by tracking every aspect of your life.

Fortunately, says Celente, civilization itself will not collapse. But it's going to get really bad for a while.

Hari, didn't Mr.Celente predict the same in early 2010 as well ? I vividly remember him crying coarse about the coming crash of 2010 and civil unrest in America, and now he blames the money printing at Fed for the postponement of 'civil unrest'. We need to be more careful while listening to these pundits of gloom and doom who make a living out of creating constant panic.

[Hari Seldon]

^^^Ambar,

Am jaded only. Nowadays my most common reaction to khanomic doominess is a big yawn nly. Not that I think all is hunky dory, just that the timelines had been overly accelerated by the doomers. Doom will come, slowly and surely. Hopefully, we'll all be dead and gone by then.