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

Neshant · Post by **Neshant** » 31 Jul 2011 14:47

I think it will be within the next 2 to 5 years rather than this year as the article predicts. Never underestimate the ability to kick the can down the road. I'm on record as having predicted that in 3 to 5 years time, the Federal Reserve will be rolled up and shut down.

Either way, it does not look good. Lets pray it brings down the useless middleman industry known as financing & banking. That might be the only good to come out of this.

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GEAB N°54 is available! Global systemic crisis: Autumn 2011 – Budget/T-Bonds/Dollar, the three US crises which will cause the Very Serious Breakdown of the global economic, financial and monetary system

- Public announcement GEAB N°54 (April 16, 2011) -

The 15 September 2010, GEAB N°47 issue was headed « Spring 2011: Welcome to the United States of Austerity / Towards the very serious breakdown of the world economic and financial system ». Yet at the end of summer 2010, most experts believed first, that the debate on the US budget deficit would remain a mere subject of theoretical discussion within the Beltway (1) and secondly, that it was unthinkable to imagine the United States engaging in a policy of austerity because it was sufficient for the Fed to continue to print dollars. Yet, as everyone has been able to see for several weeks, Spring 2011 really did bring austerity to the United States (2), a first since the Second World War and the setting up of a global system based on the ability of the US engine to always generate more wealth (real from 1950 to 1970, increasingly virtual thereafter).

At this stage, LEAP/E2020 can confirm that the next stage of the crisis will really be the "Very Serious Breakdown of the world economic, financial and monetary system" and that this historic failure will occur in autumn 2011 (3). The monetary, financial, economic and geopolitical consequences of this "Very Serious Breakdown" will be of historic proportions and will show the crisis of autumn 2008 for what it really was: a simple detonator.

The crisis in Japan (4), the Chinese decisions and the debt crisis in Europe will certainly play a role in this historic breakdown. On the other hand we consider that the issue of government debt of countries on Euroland’s periphery is no longer the dominant European risk factor here, but it is the United Kingdom which will find itself in the position of the "sick man of Europe" (5). The Eurozone has in fact established and keeps improving all the monitoring systems needed to address these problems (6). Management of the Greek, Portuguese and Irish problems will therefore take place in an organized fashion. That private investors must take a haircut (as anticipated by LEAP/E2020 before summer 2010) (7) does not belong to the category of systemic risks, displeasing the Financial Times, the Wall Street Journal and Wall Street and City experts, trying every three months to rerun the "coup" of the early 2010 Eurozone crisis (8).

In contrast, the United Kingdom has completely missed its attempt at "preventive budgetary amputation surgery” (9). In fact, under pressure from the street and particularly more than 400,000 British who roamed the streets of London on 03/26/2011 (10), David Cameron is forced to lower his target for reducing health care costs (a key point of his reforms) (11). At the same time, the Libyan military adventure has also forced him to rethink his goals for Defense Ministry budget cuts. We already mentioned in the last GEAB issue that the British government’s financing needs continue to rise, reflecting the ineffectiveness of the measures announced whose implementation is proving very disappointing in reality (12). The only result of the Cameron / Clegg (13) duo policy is currently the relapse of the British economy into recession (14) and the obvious risk of the ruling coalition imploding after the next referendum on electoral reform.

In this issue, our team describes the three key factors that mark out this Very Serious Breakdown of autumn 2011 and its consequences. Meanwhile, our researchers have begun to anticipate the progression of the Franco-Anglo-American military operation in Libya which we believe is a powerful accelerator of global geopolitical dislocation and that it usefully illuminates some of the current tectonic changes in the relationships between major world powers. In addition to our GEAB $ index, we expand on our recommendations for dealing with the dangerous quarters to come.

Basically, the process that is unfolding before our eyes, of which the US entry into an era of austerity (15) is a simple budgetary expression, is a continuation of the balancing of the 30 trillion of ghost assets which had invaded the global economic and financial system in late 2007 (16). While about half of them had disappeared in 2009, they have been partially resurrected since then due to the volition of the major global central banks, and the US Federal Reserve in particular and its "QE 1 and 2". Our team considers, therefore, that 20 trillion of these ghost assets will go up in smoke beginning autumn 2011, and very brutally, under the combined impact of the three US mega-crises in accelerated gestation:

. the budgetary crisis, or how the United States plunges willingly or by force into this unprecedented austerity and takes whole swathes of the global economy and finance with it

. the crisis in US Treasury bonds, or how the US Federal Reserve reaches the "end of the road" which began in 1913 and must face up to its bankruptcy whatever accounting sleight of hand is chosen

. the US Dollar crisis, or how the jolts in the US currency that will characterize the ending of QE2 in the second quarter of 2011 will be the beginnings of a massive devaluation (around 30% in a few weeks).

Central banks, the global banking system, pension funds, multinationals, commodities, the US population, Dollar zone economies and/or dependent on trade with the United States (17) ... everyone structurally dependent on the US economy (of which the government, the Fed and the federal budget have become central components), assets denominated in dollars or commercial dollar transactions, will suffer the head on shock of 20 trillion in ghost assets purely and simply disappearing from their balance sheets, from their investments, and causing a major decline in their real incomes.

Around the historic shock of autumn 2011 which will mark the definitive confirmation of significant trends anticipated by our team in previous GEAB issues, the main asset classes will experience major upheavals requiring the increased vigilance of all players concerned for their investments. In fact, this triple US crisis will mark the true exit from the "world after 1945" which saw the US play the role of Atlas and will, therefore, be marked by many shocks and aftershocks in the quarters which follow.

For example, the dollar may experience short-term effects of strengthening value against the major world currencies (especially if US interest rates rise very quickly following the ending of QE2), even if, six months after that, its 30% loss of value (relative to its current value) is inevitable. We can, therefore, only repeat the advice that has appeared at the head of our recommendations since the beginning of our work on the crisis: in the context of a global crisis of historic proportions like the one we are experiencing, the only rational objective for investors is not to make more money, but to try to lose as little as possible.

This will be particularly true for the coming quarters where the speculative environment will become highly unpredictable in the short term. This short term unpredictability will be particularly due to the fact that the three US crises that trigger Very Serious Breakdown in the world in autumn are not concurrent. They are very closely correlated but not linearly. And one of them, the budget crisis, is directly dependent on human factors with a big influence on the timing of the event; whilst the other two (whatever those who see the Fed officials as gods or devils think (18)) are now, for the large part, included in the significant trends where US leaders’ actions have become marginal (19).

The budget crisis, or how the United States plunges willingly or by force into this unprecedented austerity and takes whole swathes of the global economy and finance with it
The numbers can make the head spin: "6 trillion in budget cuts over ten years" (20), said the Republican Paul Ryan, "4 trillion in twelve years” retorted the 2012 candidate Barack Obama (21), "all this is far from sufficient", bids one of the Tea Party referents, Ron Paul (22). And anyway, sanctions the IMF, "the United States is not credible when it speaks of cutting its deficits" (23). This unusually harsh remark from the IMF, traditionally very cautious in its criticism of the United States, is in any case particularly justified in terms of the psychodrama which, for a fistful of tens of billions of dollars, nearly shut down the federal state absent any agreement between the two major parties, a scenario that will, moreover, soon take place again over the federal debt ceiling.

The IMF is only expressing an opinion widely shared by creditors of the United States: if, for a few tens of billions USD in deficit reduction, the US political system reached that degree of paralysis, what will happen when, in the coming months, cuts of several hundred billion dollars a year will be required? Civil war? This is the new California governor Jerry Brown (24) opinion in any case, who believes that the United States is facing a regime crisis identical to that which led to the Civil War (25).

Neshant · Post by **Neshant** » 31 Jul 2011 15:17

This is untrue for a simple reason: extra money does not mean extra production. In contrary, all it does is shift valuable resources to debtmakers, and we all know about those trillions.

How does it end? In a full stoppage of production, when the economy get wrecked by the opportunity costs and fast raising prices.

Its a "wonderful concept".... for lazy people, for thieves, for States..etc. Inflation and manipulating interest rates is nothing more than a modern masked version of the old King's soldiers that visit you to demand a part of the fruits of your labor.

devaraj_d · Post by **devaraj_d** » 31 Jul 2011 17:55

Neshant wrote:I don't belittle it. But like I said, its a gross exaggeration that things take 20 years to get working.

What will you buy? 'A' car or 'The' car?
Obviously 'A' car.

'The' car would be a Formula-1 which I don't think I could afford.

'A' car is what you are building for the Indian, Latin American, most Middle Eastern & Asian and African markets anyway. Probably European markets too as their economy slides down the drain and luxury vanishes from their vocabulary.

Nothing has to be gold plated in any sense of the word. It just has to work with reasonable efficiency and reliability. That's the job of the design team & engineers. Now if they can't do that or claim it takes 20 years to do that, you got the wrong guys working for you. They need to be in banking.

OT.

I now understand what 'A' car means in your point of view. The cars manufactured and sold in India are not so easy as you think.

I do not know from where you got 5,10 or 20 years but there are many examples where it has taken longer. The basic crank arrangement of the commonly available engine (i.e ignoring rotary and other designs) has not changed since more than a century. Edison tried to build an electric car and look what we are trying to do now. It does not mean we can blame the people who worked on these. The time taken to solve a problem will depend on complexity, inertia (obviously I am not talking about mass here but other factors), boundary conditions, patent situation, manufacturability, validation lead time, supplier lead times, economics, technology availability and maturity and so forth. Only in IT and semiconductor industry the growth is exponential whereas others are very gradual.

Again, you have not answered my question. Please let me know "What kind of work / stuff do you do?" I am really curious because you compared it to cars.

Neshant · Post by **Neshant** » 31 Jul 2011 18:42

The useless middleman industry 101

Neshant · Post by **Neshant** » 31 Jul 2011 21:01

devaraj_d wrote:I do not know from where you got 5,10 or 20 years but there are many examples where it has taken longer. The basic crank arrangement of the commonly available engine (i.e ignoring rotary and other designs) has not changed since more than a century. Edison tried to build an electric car and look what we are trying to do now. It does not mean we can blame the people who worked on these. The time taken to solve a problem will depend on complexity, inertia (obviously I am not talking about mass here but other factors), boundary conditions, patent situation, manufacturability, validation lead time, supplier lead times, economics, technology availability and maturity and so forth.

Nothing will take 10 or 20 years to complete. You need to erase that from your mind. All that's needed are competent people to get the job done.

It might take 20 years to get top notch brand recognition i.e. to become a Toyota. Needless to say that isn't the aim of any company starting out right off the bat.

Singha · Post by **Singha** » 01 Aug 2011 15:33

http://www.google.com/hostednews/afp/ar ... 8e5cb4.261

HSBC to cut 30,000 jobs worldwide

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http://www.dailymail.co.uk/news/article ... e-axe.html

4,000 HSBC staff face the axe

by DARREN BEHAR, Daily Mail

HSBC is to axe 4,000 jobs in Britain and switch them to Asia, it announced yesterday.

The self-styled "world's local bank" will transfer the jobs to India, Malaysia and China over the next two and a half years.

Around 1,400 of the jobs will be lost in HSBC call centres.

Most of the remaining cuts will be in administration.

The decision is part of a trend sweeping British industry, with firms in the finance, airline and phone directory sectors shifting administrative and call centre jobs to low-wage nations.

It emerged this week that National Rail Enquiries was considering a move to India.

HSBC, the world's biggest bank, made £4.2billion in the first half of this year.

It claims the switch is the only way it can compete in a global market.

Last night, however, it was accused of dismissing the interests of customers and staff in this country.

The bank has already transferred 3,000 jobs abroad.

Staff were told of the latest exodus yesterday and the bank is expected to inform the Stock Exchange this morning.

HSBC plans to close all its processing sites - at Swansea, Sheffield, Birmingham and Brentwood in Essex - which look after administration.

It will also axe some jobs at call centres in Hemel Hempstead, Leeds, Swansea and Edinburgh, although these bases will remain open.

The company said it hoped most of the job losses would be voluntary but admitted some could be compulsory.

HSBC, which has 55,000 staff in the UK, will shed 1,500 in 2004, a further 2,000 in 2005 and the final 500 in 2006.

Chief executive Bill Dalton said: 2This is the next stage in a process which started three years ago.

"It is essential to HSBC's continued success.

"HSBC has a responsibility to all its stakeholders to remain efficient and competitive.

"This is the best, indeed, the only way, of ensuring job security for our staff worldwide."

Union chiefs warned of strikes. UNIFI official Rob O'Neill said: "The gloves are off. It's profit before people.

"We will fight tooth and nail to get the bank to reconsider its actions.

"The world's local bank needs local people to deliver the high quality service its UK customers have come to expect.

"What is proposed is purely profit-motivated and does not balance the interests of staff, local communities or consumers in the UK with those of shareholders.

"They might as well tear up any corporate social responsibility statements about caring for stakeholders."

A second union, Amicus, predicts that over the next five years 200,000 jobs will be lost from the UK to Asia.

Typically, wages are up to a third lower and staff are educated to university level.

The CBI has warned that thousands more jobs could be outsourced to India unless the government stops burdening firms with higher tax and red tape.

Some of the overseas call centres have been hit by problems.

There have been complaints that phone directory services in India and the Philippines have been poor due to staff having little grasp of British geography.

Read more: http://www.dailymail.co.uk/news/article ... z1TlxVIan3

Singha · Post by **Singha** » 01 Aug 2011 15:36

it seems UK is trying to revive manufacturing...

http://online.wsj.com/article/SB1000142 ... lenews_wsj

Monday's figure dents the government's hopes for a resurgent manufacturing sector to become one of the main drivers of the U.K.'s economic recovery. It is

also a blow for government's much-vaunted plan of rebalancing the economy toward the manufacturing sector so that it is no longer overly dependent on the services sector, in particular financial services. The manufacturing sector makes up only 12.8% of the U.K. economy.

The U.K.'s economic growth slowed substantially in the second quarter to just 0.2% due to a number of one-off factors, such as the royal wedding and Japanese earthquake and tsunami disaster. Economists had been looking for a rebound of activity in the third quarter, but Monday's figure dents that prospect and means that U.K.'s overall economic growth in 2011 could be far weaker than expected.

Neshant · Post by **Neshant** » 01 Aug 2011 15:37

The debt cealing has been increased - not that there was any doubt it wouldn't. I noted that the useless middleman industry known as banking & financing was lobbying hard for the increase and that alone tells me where the money will be going.

What I completely marvel at is all the commentators on CNN and other such propaganda stations saying things like "default would be a great disaster" or similar things.

The bald fact is that but for one pronouncement that the debt "ceiling" has been raised the US is ALREADY IN DEFAULT for all practical purposes!

Is it not obvious that the debt limit is purely illusory. If all it takes to avoid default is to enable more borrowing which only ADDS to the problem then how is it that people don't just realise that the game is already over??

Get your money out of the US now and out of reach of the govt there. Massive tax increases are coming after the 2012 election to pay for this parasitic form of croney capitalism that has infected the country.

Singha · Post by **Singha** » 01 Aug 2011 15:47

dont know if anything is related or everything is related but I am seeing a new wave of R2I types in blr these days, somewhat like the post-recession group in 2001 and the second wave around 2004. many seem to be quite young , ie barely spent 5 yrs there or less.

vera_k · Post by **vera_k** » 01 Aug 2011 20:29

Part of what I posted earlier in the IT thread. The small time IT firms that used to be a buffer for this crowd are having a tough time since the outsourcing model is well established and shipping people from India for a few months is quite economical.

SwamyG · Post by **SwamyG** » 01 Aug 2011 20:32

Singha wrote:dont know if anything is related or everything is related but I am seeing a new wave of R2I types in blr these days, somewhat like the post-recession group in 2001 and the second wave around 2004. many seem to be quite young , ie barely spent 5 yrs there or less.

http://articles.economictimes.indiatime ... ris-survey

With declining wages abroad, an increasing number of non-resident Indian IT professionals are moving back to their home country, says a survey.

IT and IT-enabled firms in India hired 28 percent more non-resident Indian (NRI) professionals in the first quarter of 2011-12, according to the survey conduced by recruitment consulting firm MyHiringClub.com.

Among 11 surveyed industries, IT and IT-enabled services registered highest growth, with 28 percent increase year-on-year in the first quarter of the current fiscal.

It is followed by pharma and healthcare, up by 20 percent, automobile and manufacturing, up by 18 percent, telecom, up by 14 percent, banking and financial services, up by 10 percent and FMCG, up by six percent.

vera_k · Post by **vera_k** » 01 Aug 2011 20:46

No doubt wages are declining. The average billing rate on contracts in my neck of the woods dropped from $60/hr in 2007 to $45/hr in 2011.

SwamyG · Post by **SwamyG** » 01 Aug 2011 21:05

x-post

SwamyG wrote: http://www.nytimes.com/2011/08/01/us/po ... lobal-home

It raised questions about whether the United States now faces brinkmanship over a variety of issues between an emboldened conservative movement and a president whose authority is under challenge. And for all the talk on the right about “American exceptionalism,” especially among members of the Tea Party, it put doubts in the minds of many about whether America’s military and economic dominance is something the country is still willing to pay for — and will always survive.

“The lucky thing for us is that we are in a race with Europe and Japan for ‘most financially irresponsible superpower,’ ” Walter Russell Mead, a professor at Bard College and author of many works on the waxing and waning of American power, said on Sunday. “And right now, the Europeans and Japanese have substantial advantages in that race.”

As Mr. Garten puts it, “the lesson of the debt limit crisis is that if there is another financial calamity, we’re operating without a safety net. Get used to it.”

svinayak · Post by **svinayak** » 02 Aug 2011 03:35

MSM including CNBC, CNN etc just glossed or even ignored over these events when it was actually happening! 2008 was papered over 4+Trillions but the problems( unemployment, housing, insolvent Banks) are still here! Market however recovered almost 100% from it's low in March 2009 built on (house of cards) shifting sand! A repeat of 2008, probably worse, shouldn't be a surprise to any one! When exactly and how fast or slow, does it unravel, is the question!

http://www.washingtonpost.com/business/ ... story.html

Singha · Post by **Singha** » 02 Aug 2011 07:38

vera_k wrote:No doubt wages are declining. The average billing rate on contracts in my neck of the woods dropped from $60/hr in 2007 to $45/hr in 2011.

taking into account inflation over 4 years, its almost like a 33% decline. savings potential must be hard hit by such changes?

devesh · Post by **devesh** » 02 Aug 2011 08:10

if you live in NJ area, savings is out of question. in a family of four, if both parents together make around 175,000/annum, you want to live in at least a town-home with some level of comfort. but as soon as you get into the business of owning homes, you're done. your savings go out the window. I have come to the conclusion, after a lot of data points collected from friends, neighbors, colleagues, etc that home owners have no potential for savings, as long as they are stuck paying mortgage.

almost all the people that I know, who bought houses for around or more than $600K, have either sold their homes or are desperately trying to sell them off. it's been going on for almost 2 years now, with people trying to sell off, but nobody ready to buy for such huge prices. one family finally got fed up and sold off their house for a loss of $70K.

for those living in India, I know $600K seems a huge amount, but in NJ there are loads of communities with huge 4-6 bedroom mansions/homes which routinely start around $550K.

Neshant · Post by **Neshant** » 02 Aug 2011 08:53

Wouldn't it be ironic if hyper-inflation (which i'm sure is one option on the cards) wiped out mortgage debts and these folks ended up with a free house.

Given the trend sweeping the US where financial irresponsibility reaps rich rewards, I wouldn't be surprised if these folks ended up ahead.

Pity the sucker who saved his money frugally, did not take vacations, rented hoping one day to buy, drove a crappy car or bussed to work, lived within his means.. etc.

This is why banking crook controlled fiat money is such a scam.

vera_k · Post by **vera_k** » 02 Aug 2011 09:47

Singha wrote:taking into account inflation over 4 years, its almost like a 33% decline. savings potential must be hard hit by such changes?

Of course. There is a double whammy for these folks, since most of them rent. Rents have risen quite a bit since more people are avoiding buying homes and choosing to rent. There's not enough apartments to go around because a lot were converted to flats and sold off during the good times.

Friend and I were talking about the evolution just the other day -

1. 1999'ish, everyone coming over lived like royalty with company paid accomodation in the Residence Inn.

2. 2002'ish, downgraded to individual 1 BHK apartment.

3. Now, crammed 5 to the 2 BHK apartment. End of gravy train IMO.

devesh wrote:for those living in India, I know $600K seems a huge amount, but in NJ there are loads of communities with huge 4-6 bedroom mansions/homes which routinely start around $550K.

Ironically, $600K will only get you a small shack - if at that - in the Indian metro cities

Nowhere close to the 6 bedroom homes in NJ. Compared to India, USA is on top when it comes to quality of life and value for money. Only change is that for economically driven decisions - as in savings - India is probably close to or better than USA at this point, specially if people don't have huge residential costs.

shyam · Post by **shyam** » 02 Aug 2011 09:58

A friend of mine, who is simple and not at all financially savvy, just refinanced his home for interest only mortgage. When I asked him why he went for interest only loan, he said many people told him Fed is printing a lot of money and inflation is expected to go sky high. By the time principal payment is due, inflation would have made it cheap. All I could tell him is that he is playing with fire.

Neshant · Post by **Neshant** » 02 Aug 2011 11:12

Its either going to be inflation or default. No 2 ways about it. One thing we can be sure of is the debt is not going to be repaid at current purchasing power. That sh&t is only for developing countries where austerity is enforced and their ASSets are sold off to IMF goons who are representative of foreign corporate interests.

If I had to bet, I'd bet on inflation. Take a 30 year mortgage now on a home and by the time you make your final mortgage payment, the check in the envelope will be worth less than the stamp on it.

Why else would the govt buy up all these mortgages if not to shread them through inflation.

Creditors and savers are about to be pilfered.

Theo_Fidel · Post by **Theo_Fidel** » 02 Aug 2011 11:41

devesh wrote:almost all the people that I know, who bought houses for around or more than $600K, have either sold their homes or are desperately trying to sell them off. it's been going on for almost 2 years now, with people trying to sell off, but nobody ready to buy for such huge prices. one family finally got fed up and sold off their house for a loss of $70K.

This was not Desi's alone. Americans too fell for this crap big time. The Desi's came late to the party. The one Desi family in my neighborhood moved into a $460,000 home in Fall of 2008. Another had a home built starting in 2007 and moved in 2009 for $650,000. Both are underwater big time.

What kills people is the taxes+Utility costs+Maintenance costs+Housing Society dues. Easily doubles the mortgage claim. Colleague has a large 5 bedroom house (He is single after his girlfriend left) all to himself w/ a $800 per month heating bill and a $600 per month cooling bill.

If in Massa, get the 15 year loan. On 30 you will be tempted to get way more than you can afford. They make it sound so cheap.

Singha · Post by **Singha** » 02 Aug 2011 12:53

so what exactly are NRIs who are settled in US investing their savings in these days over there ? if they are investing into India, what are they investing in here?

VikramS · Post by **VikramS** » 02 Aug 2011 13:03

The debt ceiling raise is a short term relief. In the bigger picture, the entitlements will be cut and taxes will go higher sooner or later.

However it is important to keep things in context. During the Clinton era the US was running a surplus. The Trillions spent in the GOAT has been one of the primary drivers of the debt burden. During Obama era, the unemployment benefits and stimulus money sent to the local governments is a big component.

The Tea Party folks have bought the issue to the fore-front and their holding out for no taxes is changing the game a bit.

In my neck of the woods here in the valley, the job situation is pretty decent. The state of California is also ahead of its projections on revenue collection; they actually lowered the sales tax at the end of June. A lot of this deficit will come down if the economy picks up.

One big problem with the economy is that it is becoming harder to hire thanks to the overheads associated with a new hire; many companies especially in the lower to middle wage professions prefer to pay 50% overtime instead of hiring a new worker since the cost of benefits/workers comp/xyz insurance adds a significant overhead. It is very hard for Americans to compete in such an environment. Obamacare is also a drag since many small businesses are not sure how much it will eventually cost them; noble intentions but messed up implementation.
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Neshant · Post by **Neshant** » 02 Aug 2011 13:23

Other than the useless middleman industry, can't quite say what is doing well in the US.

For now the stimulus money (with is just debt and money robbed from savers & creditors) is propping up everything from the tech sector to the govt employers. But how long can this last.

Perhaps jobs will return once the Federal Reserve has destroyed living standards to a point where American populace goes from developed country to developing country.

Sri · Post by **Sri** » 02 Aug 2011 14:32

Singha · Post by **Singha** » 02 Aug 2011 14:40

http://www.reuters.com/article/2011/08/ ... 2R20110801

(Reuters) - Russian Prime Minister Vladimir Putin accused the United States Monday of living beyond its means "like a parasite" on the global economy and said dollar dominance was a threat to the financial markets.

"They are living beyond their means and shifting a part of the weight of their problems to the world economy," Putin told the pro-Kremlin youth group Nashi while touring its lakeside summer camp some five hours drive north of Moscow.

"They are living like parasites off the global economy and their monopoly of the dollar," Putin said at the open-air meeting with admiring young Russians in what looked like early campaigning before parliamentary and presidential polls.

US President Barack Obama earlier announced a last-ditch deal to cut about $2.4 trillion from the U.S. deficit over a decade, avoid a crushing debt default and stave off the risk that the nation's AAA credit rating would be downgraded.

The deal initially soothed anxieties and led Russian stocks to jump to three-month highs, but jitters remained over the possibility of a credit downgrade.

"Thank god," Putin said, "that they had enough common sense and responsibility to make a balanced decision."

But Putin, who has often criticized the United States' foreign exchange policy, noted that Russia holds a large amount of U.S. bonds and treasuries.

"If over there (in America) there is a systemic malfunction,

this will affect everyone," Putin told the young Russians.

"Countries like Russia and China hold a significant part of their reserves in American securities ... There should be other reserve currencies."

U.S.-Russian ties soured during Putin's 2000-2008 presidency but have warmed significantly since his protégé and successor President Dmitry Medvedev responded to Obama's stated desire for a "reset" in bilateral relations.

EARLY CAMPAIGNING?

Casually dressed in khaki trousers and a striped white shirt, Putin flew by helicopter to the tented camp as part of a string of appearances that are being closely watched in the run-up to the elections.

He did not say whether he plans a return to the Kremlin or will stand aside for Medvedev, his partner in Russia's leadership tandem, to run for a second term.

But young people crowding round Putin, caught up in the campaigning spirit created by huge portraits of Putin hung from trees, were not shy about saying who they wanted as president.

"Russia's next president will be small, bald and look like Putin," 17-year-old Ilya Mzokov joked with reporters. Asked why Medvedev was not paying a visit to the summer camp, he said: "Only serious people come here."

Youngsters chanted Putin's name and applauded his remarks as he strolled round the camp, where US-style business seminars, extreme sports and political mudslinging were among the topics on offer.

Putin, whose macho image appeals to many Russians, briefly swung himself up the first half of a climbing wall, filmed by a gaggle of state television cameras.

Nashi, which means "Our People," was created by the Kremlin to counter popular dissent after youth activism helped topple a pro-Moscow government in Ukraine's 2005 Orange revolution.

The group has worked to spread a personality cult around Putin and regularly campaigns against Kremlin critics.

Opinion polls show Putin, still widely viewed as the country's paramount leader, retains near 70 percent approval.

But his United Russia party is trying to reverse a slide in popularity before December parliamentary polls, hoping to use a strong showing there to help Putin in the March 2012 presidential vote.

(Writing by Alissa de Carbonnel; editing by Tim Pearce)

SwamyG · Post by **SwamyG** » 02 Aug 2011 17:50

Singha wrote:so what exactly are NRIs who are settled in US investing their savings in these days over there ? if they are investing into India, what are they investing in here?

I would not call myself settled in USA; yet will answer the question

. I buy small real-estate properties in KA, AP and TN

I have also bought couple of gold bars. In USA just MMA and stocks.

devesh · Post by **devesh** » 02 Aug 2011 22:50

SwamyG wrote:
Singha wrote:so what exactly are NRIs who are settled in US investing their savings in these days over there ? if they are investing into India, what are they investing in here?
I would not call myself settled in USA; yet will answer the question . I buy small real-estate properties in KA, AP and TN I have also bought couple of gold bars. In USA just MMA and stocks.

++1

investing in silver and gold. recently been steadily buying decent quantities of both. get out of any mutual funds or retirement stocks which invest in sovereign national bonds. right now is not a good time to be in govt bonds. Eurostan seems about to collapse any time now. US seems about to get a downgrade.

yogi · Post by **yogi** » 03 Aug 2011 00:12

Singha wrote:so what exactly are NRIs who are settled in US investing their savings in these days over there ? if they are investing into India, what are they investing in here?

Not settled in US by any means... but FWIW

10% Indian Real Estate
10% Gold
10% Indian Currency
10% Luxury Automobile (that typically holds their value)
10% Indian Stocks

Remaining in USD/US Blue-Chip Stocks/US Stock MF/Foreign&Emerging Mkt MF.

NO US real estate for me personally. Diversification is the only option that little people have. Going all in to Gold/Real-estate is playing with fire.

Singha · Post by **Singha** » 03 Aug 2011 07:17

Just what Neshant had been warning about has happened!

print edition of TOI today.

"India to finance european bailout"

the GOI on tuesday sought parliamentary approval for over 9003 crore ($2 billion) in loans to IMFs new arrangements to borrow (NAB), a fund whose corpus was raised to over $500billion in march when the debt crisis in europe showed no signs of abating.

---
the article should be online in a few hours.

sumishi · Post by **sumishi** » 03 Aug 2011 11:40

^
X-Posting from Indian Economy: News and Discussion:

Dhiman wrote:
wig wrote:times seem to be changing => India to give $2bn to fund bailouts in Europe
What a massive waste of $2b.

Can anyone please explain what exact route this money, and its returns, will take? Who will be the final beneficiaries?

Neshant · Post by **Neshant** » 03 Aug 2011 13:49

Singha wrote:Just what Neshant had been warning about has happened!

"India to finance european bailout"

The bitter irony is that when India was near broke, it had to fly its gold reserves over to UK as demanded by that country prior to getting a fiat currency loan. But even these bankrupt Euro states get to keep their gold reserves and get this money almost like charity. By keeping their stooge Lagarde as head of the IMF, they get to game the system both ways and offload their losses on the world.

The 2 billion will go straight towards paying German & French banks owed money by Greece. Greece will later default on the IMF. Thus it will be a European bank bailout with India eating the loss. Great scam for Euros to offload their bad debts on others.

A case of the poor subsidizing the well off.

India better be wary about being bamboozled into an international currency via the IMF. US will surely try that move and China + Arabs will surely support it because they are sitting on a mountain of dollars which they know are worth substiantially less by the minute. That worthless paper is really just bad debt.

Both China and US are greatly restricted by how much gold they can puchase without causing panic and causing a rapid slide in the USD's value & US Treasury demand. Not so for India since we don't have a ton of worthless paper "reserves" to protect.

India should be taking the opportunity NOW to massively up its purchase of physical gold while US & China can't do so. All we need are strong capital controls and laws that give the central govt supreme authority to change the rules of the game as it pleases just in case either country tries to attack India's economy by rapidly drawing out dollars.

Hope the babuz are not sleeping and are on the ball. We are approaching a very important juncture in financial history.

sumishi · Post by **sumishi** » 03 Aug 2011 14:03

Neshant wrote:...
The 2 billion will go straight towards paying German & French banks owed money by Greece. Greece will later default on the IMF. Thus it will be a European bank bailout with India eating the loss. Great scam for Euros to offload their bad debts on others...

Guessed as much. Thanks for the input.

Neshant · Post by **Neshant** » 03 Aug 2011 14:14

American rating agencies are highly biased in favor of the US govt. Personally I think they are part and parcel of the US govt with just the PRETENCE of indepdence. They consistenly give western govt better credit ratings than they deserve.

I don't know if they realise what damage they are doing to their credibility - beyond the already irrepairable damage they've done after trillions of MBS they rated AAA blew up in 2008.
-------------

Moody's confirms U.S.'s triple-A rating

http://www.marketwatch.com/story/moodys ... 02-1758150

SAN FRANCISCO (MarketWatch) -- Moody's Investors Service late Tuesday confirmed the U.S.'s triple-A rating following the increase in its debt ceiling.

Neshant · Post by **Neshant** » 03 Aug 2011 14:24

Chinese rating agency downgrades US from A+ to A with negative outlook

http://www.dagongcredit.com/dagongweb/e ... web_e_zxzx

SwamyG · Post by **SwamyG** » 03 Aug 2011 17:55

sumishi wrote: Can anyone please explain what exact route this money, and its returns, will take? Who will be the final beneficiaries?

It will be the rich Western European banks, who are suffering because of the poor PIGS.

http://timesofindia.indiatimes.com/indi ... 463341.cms

Hari Seldon · Post by **Hari Seldon** » 03 Aug 2011 20:19

Having been guilty of crying wolf too often, boor moi has decided to sit out the latest half-assed 'crisis' in the ~~globaloney~~ global economy.

Let's face it fellow Doomers and gloomers, we've nothing to show in sovereign defaults since the 2008 meltdown. 'cept one piddly Iceland. Not 1 TFTA economy has defaulted so far. No riots, revolutions, upheavels of any contagious sort anywhere really....Let some TFTAs fall, then it will be fun to come in saying 'told ya so' only. Till then, sack out only. Not that we can do much about anything anyway but wait, watch and hope for a soft landing....

ramana · Post by **ramana** » 03 Aug 2011 21:32

Hari Seldon wrote:Having been guilty of crying wolf too often, boor moi has decided to sit out the latest half-assed 'crisis' in the ~~globaloney~~ global economy.

Let's face it fellow Doomers and gloomers, we've nothing to show in sovereign defaults since the 2008 meltdown. 'cept one piddly Iceland. Not 1 TFTA economy has defaulted so far. No riots, revolutions, upheavels of any contagious sort anywhere really....Let some TFTAs fall, then it will be fun to come in saying 'told ya so' only. Till then, sack out only. Not that we can do much about anything anyway but wait, watch and hope for a soft landing....

Not so fast Hari!

US economy at stall speed

Pacific Investment Management Co. and BlackRock Inc., which together oversee almost $5 trillion, say the U.S. economy is stalling.

Bill Gross, who runs the world’s biggest bond fund at Pimco, and Peter Fisher, head of fixed income at BlackRock, say the Federal Reserve is preparing measures to counter the slowdown.

“We’re not looking at a recession yet, but we’re at a tipping point,” Gross said yesterday in an interview on Bloomberg Television. “We’re at what we call a stall speed in which corporate profits don’t grow, jobs aren’t created,” said Gross, who is based in Newport Beach, California.

The U.S. recovery that began two years ago has been losing momentum and there are even odds the nation will slip into a recession, according to Harvard University economics professor Martin Feldstein. Investors who are seeking safety from a slowing economy and betting the central bank will keep interest rates on hold are snapping up Treasuries, sending two-year yields to a record low 0.3081 percent today.

The Fed may arrange a third round of quantitative easing, known as QE3, Gross said. The central bank purchased bonds to cap borrowing costs in the first two easing efforts. The Fed has also promised to keep the target for overnight bank lending low for an “extended period.” Policy makers cut the target rate to a range of zero to 0.25 percent in 2008 to support the economy.

QE3 ‘Potential’

“There’s a potential for a QE3,” said Gross, who oversees $1.28 trillion as Pimco’s co-chief investment officer. “I suggest, however, that that takes the form really of language, of extended period language, and maybe some type of cap on five- or even 10-year Treasury securities.”

Two-year notes yield seven basis points more than the upper end of the Fed’s target range, the least since Dec. 15, 2008. Policy makers cut the benchmark to the record-low current range the following day.

The U.S. economy is “very close to stall speed” and the Fed may need to consider signaling a longer commitment to low interest rates, according to BlackRock’s Fisher, who is based in New York.

“I believe the Fed is dusting off contingency plans if the economy does not improve,” he said in a report that BlackRock distributed by e-mail today. Fisher worked for 15 years at the Fed Bank of New York, according to BlackRock, which has $3.66 trillion in assets.

U.S. gross domestic product expanded at a 1.3 percent annual rate in the second quarter, after a 0.4 percent pace in the prior period, the worst six months since the recovery began in June 2009, according to the Commerce Department.

“This economy is really balanced on the edge,” Feldstein said yesterday in an interview on Bloomberg Television’s “Surveillance Midday” with Tom Keene. “There’s now a 50 percent chance that we could slide into a new recession,” he said.

shyamd · Post by **shyamd** » 03 Aug 2011 21:46

Hari Seldon wrote:Having been guilty of crying wolf too often, boor moi has decided to sit out the latest half-assed 'crisis' in the ~~globaloney~~ global economy.

Let's face it fellow Doomers and gloomers, we've nothing to show in sovereign defaults since the 2008 meltdown. 'cept one piddly Iceland. Not 1 TFTA economy has defaulted so far. No riots, revolutions, upheavels of any contagious sort anywhere really....Let some TFTAs fall, then it will be fun to come in saying 'told ya so' only. Till then, sack out only. Not that we can do much about anything anyway but wait, watch and hope for a soft landing....

Hari uncle - be patient. At least 1 will,the current situation - they are just putting off default till a later date. Going forward Italy and Spain are in deep trouble. It will all betoo much for EFSF.

SwamyG · Post by **SwamyG** » 03 Aug 2011 21:53

Hari: I was little upbeat in 2010. Alas in 2011, looking at the new cycle I am not so upbeat. My stocks rebounded heavily and I recovered all my paper losses. So I thought it is the same old crooked American politicians bickering. I see frenzied hiring activity in the IT areana, that is all. Rest is still struggling. Suddenly the "W" chart looks like a possibility. In 2-3 months, we will have more info - to bloom or to doom. Right now, I am cautiously sitting on the sidelines. Maybe good idea to pay of some housing loans in desh using maasa dollahs. Who knows some bright chap might come along and say "All money in US banks stays in US. No transfers outside".