If it was only Indian that is a good thing. India has a history of its own and its own method.SwamyG wrote:
I will take the portrayal positively; if people continue to sit back and take notice of desh it gives me immense happiness.
Japan, meanwhile, expressed confidence in U.S. government debt. "We continue to believe that U.S. Treasurys are an attractive product for us," said Finance Minister Yoshihiko Noda.
Oh, it won't be pretty. But so effing what. Not everything need be pretty anyway. The TFTA khanomies will survive and thrive, so what if a few of their tfta aam aadmis get skrewed in the process.Education is a bubble in a classic sense. To call something a bubble, it must be overpriced and there must be an intense belief in it. Housing was a classic bubble, as were tech stocks in the ’90s, because they were both very overvalued, but there was an incredibly widespread belief that almost could not be questioned — you had to own a house in 2005, and you had to be in an equity-market index fund in 1999.
Probably the only candidate left for a bubble — at least in the developed world (maybe emerging markets are a bubble) — is education. It’s basically extremely overpriced. People are not getting their money’s worth, objectively, when you do the math. And at the same time it is something that is incredibly intensively believed; there’s this sort of psycho-social component to people taking on these enormous debts when they go to college simply because that’s what everybody’s doing.
It is, to my mind, in some ways worse than the housing bubble. There are a few things that make it worse. One is that when people make a mistake in taking on an education loan, they’re legally much more difficult to get out of than housing loans. With housing, typically they’re non-recourse — you can just walk out of the house. With education, they’re recourse, and they typically survive bankruptcy. If you borrowed money and went to a college where the education didn’t create any value, that is potentially a really big mistake.
Hmmm, eh?The problem is that there are no other routes to better occupations and higher salaries anymore, except for those who have odd skills (athletes, rock stars, starlets willing to reveal all) - which most of us don't have. Education has not stopped delivering its expected returns, not in terms of income or (un)employment. It has stopped delivering on the promise of a middle-class job = professions and managerial occupations, for which a BA was sufficient inthe 60s, and for which an MA is now necessary. So this leads to education inflation = middle-class kids seeking MA degrees and professional degrees, where a BA might have sufficed a generation ago. I don't see any decline in the willingness of parents to sacrifice for their kids.
Interesting. No scope of a deflationary bubble burst in an undercapacity world. None, nada.Now, it may be that higher education has become too expensive for some people - working-class/moderate income - and they will not be able to afford it. Many of these potential students now go to community colleges, but they may be squeezed out when regional universities cut back on their slots, and community colleges can't expand to accept more students. But this is a problem of undercapacity, not overcapacity.
It may be that fly-by-night privates have over-expanded - the U of Phoenixes of the world - but it would be a good thing to get rid of them. In California ... everyone is worried about how to accommodate all those who want/need higher ed, and I haven't heard any fears of over-capacity. Look at the Pubic Policy Institute of CA - they have been screaming about under-capacity for a long time. So the over-capacity argument in general is absurd, though it might apply to specific niches.
OK. I'll kinda buy that. Let's see how things pan out. I'd rather there be no more bubble bursts and all that. Enough disruption in mango lives already, I reckon, even for the TFTA developed world.First, the dollars in question are actually relatively small. The Project on Student Debt reports that nationally, the average debt for those graduating seniors who have taken out loans was $23,200 in 2008. The payment for loans of that size is typically a couple hundred bucks a month, or about what recent grads will be spending monthly on cable and cell service. That's up, at a pace of about 6 percent a year, from $18,650 in 2004.
And about one-third of students graduate with no loans at all; they're not included in these debt figures.Second, while the national media tend to focus on the eye-popping tuitions of places like Harvard and Stanford, the vast majority of our nation's students attend institutions that cost a relative pittance. In 2010, the College Board reported that annual tuition and fees averaged $2,713 at two-year colleges, $7,605 at public four-year colleges for in-state students and $11,990 at public four-year schools for out-of-state students. It is the cushy private four-years, with average tuition and fees of $27,293, that make college seem so expensive.
The new thing is call 'gamification' of the population. This is recent and they are still studying it.devesh wrote:^^^
another interesting aspect in Uncle land is the complete insulation of the general public from reality. it is as if people don't realize what's happening. there used to token outrage before when oil price went up too much. now, even that's not there. it's like nobody care anymore. or just a general feeling of apathy. this is disturbing. the voting people of the most dangerous country on earth are generally apathetic to the doings and machinations of their leadership and economic elite. they don't even question it. they don't even understand that FED printing money is directly related to skyrocketing oil prices not just in USD but in all other currencies b/c Oil is tied to USD. same with all other commodities. this is just one example. there is a complete disconnect with reality. the public seems to be content enough to go back to status quo of debt binging.
The first decade of the 21st century was truly a lost decade as far as America was concerned.Ameet wrote:America's lost decade
http://www.calculatedriskblog.com/2011/ ... ecade.html
There are currently 130.738 million payroll jobs in the U.S. (as of March 2011). There were 130.781 million payroll jobs in January 2000. So that is over eleven years with no increase in total payroll jobs.
And the median household income in constant dollars was $49,777 in 2009. That is barely above the $49,309 in 1997, and below the $51,100 in 1998. (Census data here in Excel).
Just a reminder that many Americans have been struggling for a decade or more. The aughts were a lost decade for most Americans.
There are currently 7.25 million fewer payroll jobs than before the recession started in 2007, with 13.5 million Americans currently unemployed. Another 8.4 million are working part time for economic reasons, and about 4 million more workers have left the labor force. Of those unemployed, 6.1 million have been unemployed for six months or more.
Sudden spike in oil, silver, etc since last month signaled QE continuation - call it QE2.lite (instead of saying QE3). General correction is due to flush out oil and metal speculators for timebeing.Suraj wrote:For those with their noses closer to the ground, what's you're take on the potential for QE3 ? With QE2 winding down by June, the markets are headed for the toilet if there's no QE3.
It all boils down to 2012 elections. What will be done is what the politicians need - a perception that things are getting better in USA.Suraj wrote:For those with their noses closer to the ground, what's you're take on the potential for QE3 ? With QE2 winding down by June, the markets are headed for the toilet if there's no QE3.
b/c = becauseramana wrote:Devesh, What is b/c debt? Please dont use non standard abbreviations for the sake of all others.
Well, that flow. What about stock, you ask?Britain’s shortfall in its finances amounted to 10.4pc of gross domestic product (GDP) in 2010, according to data for each of the EU’s 27 member states from the statistics agency Eurostat.
That meant the UK had a bigger deficit, or annual shortfall, than the recently bailed-out Portugal and also Spain, which is viewed as the next euro-using nation to potentially need international aid.
The largest deficit in proportion to the size of the country’s economy was seen in Ireland, where the extra borrowing needed to shore up the banks left its deficit at 32.4pc of GDP.
Greece, which received a €110bn bail-out last year, was second with a deficit of 10.5pc, followed by the UK. Spain, at 9.2pc, and Portugal, at 9.1pc, were in fourth and fifth place.
The data showed the Greek finances were in an even poorer state than previously thought, as the latest figure – while trimmed from the previous year’s 15.4pc – was higher than the latest 9.6pc estimate from the European Union and the International Monetary Fund.
Thr problem though, with running 10%+ deficits y-o-y is that you'll cross the 100% debt-to-GDP level mighty fast given that the deficits are either monetized or covered for with market borrowings.In terms of total debt, the UK fared much better, although it was still among the 14 EU member states burdened with a debt higher than 60pc of GDP last year. EU member states are supposed to keep their debt under the 60pc level.
The debt figures, which refer to a government’s total borrowing over time, rather than the latest yearly shortfall, showed Greece was again in the worst position with a debt equivalent to 142.8pc of its GDP, followed by Italy at 119pc and Belgium at 96.8pc.
The UK was in the ninth weakest position with a debt standing at 80pc of GDP, which was worse than Spain’s 60.1pc. The average debt across the 16 members that use the euro hit a record 85.1pc, up from 79.3pc the previous year.
Now, wouldn't that mean hard assets in the TFTA world become cheaper for us SDREs to make a grab for? But notice how the glass walls prevent asset transfers in selective cases.... Unocal or DPW anybody? What if, say, the Tatas wanted to buy Rolls-Royce tomorrow? Good aircraft engine tech, I hear...Given the fiscal mess in the UK, one might expect the British Pound to be among the weaker currencies in relation to the US dollar. Indeed, note that the British pound is 22% down from its 2008 peak vs. the US dollar in spite of retrace of a portion of its loss, and in spite of US dollar weakness against nearly everything else.
Margin financing in equities and commodities works by the consumer taking a bath in the event of a tumble in prices i.e. you cannot meet your margin call, your position is liquidated and you lose your equity....the financier is safe. Sadly for the banks, housing does not work that way.....they take the bath. And they have taken such a bath, they are still wet. Hence all these measures I outlined in my post above. Right now in the US, neither the banks nor their overseer the Fed has the appetite to resurrect NINJA loans.vera_k wrote:What's with the move to increase lending standards for home loans? Seems like they want some deflation in that asset class, but want to inflate a bubble in commodities and equities.
Its all about reducing potential bank exposure...in the US system unlike virtually all other countries, mortgages are asset backed i.e. beyond his equity, the borrower does not have a stake in it. In other countries in the event of default, a lender can pursue other assets of the borrower upto and including garnishing of wages and some borrowers have to declare personal bankruptcy with all of its consequences. Hence the propensity to gamble on the upside in US real estate. To force a legal change to enable the borrower become personally responsible beyond his/her downpayment is a political challenge which is impossible to overcome in the current US gridlocked political situation. Therefore a simpler method to reduce the tendency to gamble is to increase downpayments. Regarding the FHA, I would presume the only reason is to eliminate the same ambiguity which befell Fannie and Freddievera_k wrote:^^^
NINJA I get. But there is news about increasing down payment requirements and shutting down FHA. That's what makes me wonder if there's not more to this than meets the eye.
Interesting perspectives.There is a very peculiar article by Steven Davidoff up at the New York Times: “As Wall St. Firms Grow, Their Reputations Are Dying.” It asks a good question: why does reputation now matter for so little in the big end of the banking game? As we noted on the blog yesterday, a documentary team was struggling to find anyone who would go on camera and say positive things about Goldman, yet widespread public ire does not seem to have hurt its business an iota.
Some of Davidoff’s observation are useful, but his article goes wide of the mark on much of its analysis of why Wall Street has become an open cesspool of looting and chicanery (as opposed to keeping the true nature of the predatory aspects of the business under wraps as much as possible).
.China is raping this country,” Trump told employees at Wilcox Industries, a company that manufactures tactical equipment for U.S. military forces.As a potential presidential candidate Trump has been critical of the Obama administration’s approach to the Asian economic powerhouse. At a news conference at the airport just after landing his helicopter in New Hampshire, Trump said China is taking over the world because its leaders are smarter
The dollar index is higher than what it was just at the onset of sub-prime mortgage crisis. US is not going to lose sleep over the falling dollar. They are creating a situation where countries like China,India and other strong Asian economies are forced to revalue their currencies thanks to the inflation. The Yuan just broke a 18 year high against USD, and will probably continue to strengthen as China fights a 'unofficial' 10% inflation. I cannot say much about INR, it has been in the same band for a while and the RBI seems to have run out of ammunition to fight inflation. We have short memories. Lets not forget about the food riots in much of Asia and Africa in 2007 when USD fell below 75 on the index. If someone has to really worry, it is the developing world where essentials make a huge component of expenditure.Altair wrote:I am going to bring another angle here in this discussion. Any BRFites here doing currency/FOREX trading would know the USD is falling too steeply. If it breaks the 2008 levels of US Dollar index and if the debt ceiling is not changed before it exhausts, there is a much much bigger problem for US than a deal gone bad. America is in a situation where if they do not act in the next 2 months and get the dollar up, financial meltdown of 2008 will look like picnic.
It is also creating a situation that makes these countries to think about how to continue trade without using USD. If they succeed in that, it is going to be scary for the US.Ambar wrote:The dollar index is higher than what it was just at the onset of sub-prime mortgage crisis. US is not going to lose sleep over the falling dollar. They are creating a situation where countries like China,India and other strong Asian economies are forced to revalue their currencies thanks to the inflation.
Like I said, Yawn only.The world's central banks have pumped £3 trillion into the global financial system since the crisis, the equivalent of 8pc of the world economy, according to new analysis by Fathom Consulting. The figures will intensify fears that the extraordinary injection of liquidity is responsible for rising stock markets, rather than any underlying pick-up in corporate health or investor confidence.
Erik Britton, a director at Fathom, compared the development to throwing lighter fuel on a barbecue. The question is, he said, "whether the coals are lit". The warning is the result of the extraordinary measures to prop up the financial system, which have seen central banks resort to strategies such as buying up bonds to keep the flow of money circulating.
Fathom's economists are worried that last year may have marked the high point of the global recovery. "It remains unclear how much of the equity market rally has been 'genuine', rather than simply a 'mopping up' of that extraordinary injection of liquidity," they warned. "As that stimulus is gradually withdrawn, further gains in equity markets will be harder to achieve."
To reach the £3 trillion figure, presented in its calculations as $5 trillion, Fathom measured the liquidity injections made by the world's four major central banks, by tracking how their balance sheets changed in the wake of the crisis.
What BS. Stop pretending that just coz Ben doesn't know, you do. Pomposity or what.In a BusinessWeek editorial, Peter Coy and Rouben Farzad described the bubbles:
es, the “granddaddy of all bubbles” will explode right in Fed Chairman Ben Bernanke’s face, a bubble that will then sink like a stiletto deep into the “heart of the monetary systems” across the world, proving something Nassim Taleb said about Bernanke when Obama reappointed him in 2009, “he doesn’t even know he doesn’t understand how things work,” and that his methods make “homeopath and alternative healers look empirical and scientific.”“It’s as if 2008 never happened. Once again the worlds investors are pumping up bubbles that will probably explode in their faces. After the popping of a real estate bubble led to the first global recession since the 1930s, world markets are frothing like shaken Champagne. Pundits claim to have spotted price increases that are unsupported by economic fundamentals in assets ranging from U.S. farmland to Israeli biotech to Australian housing to Chinese cemetery sites. Commodities have soared. Global junk-bond issuance hit a record in the first three months of the year … this is the granddaddy of them all, an almost-encompassing bubble right at the heart of monetary systems.”
