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

Singha · Post by **Singha** » 07 Jun 2012 11:53

sooner this artificial construct collapses the better probably .... natural forces of ethnicity , trade and resources will lead to the scandinavians+dutch banding together, franco-german-russian axis, franco-italian bhaichara, uk-dutch axis.....countries with things to offer and staying power. the lightweights who got to dress up in heavyweight trunks will be nook nood ... the US is not in any mood to prop them up other than selective cats paw use as ABM sites to needle Russia.

borders, passports, visas and permits will be back in fashion.

Altair · Post by **Altair** » 07 Jun 2012 12:05

Singha wrote:sooner this artificial construct collapses the better probably .... natural forces of ethnicity , trade and resources will lead to the scandinavians+dutch banding together, franco-german-russian axis, franco-italian bhaichara, uk-dutch axis.....countries with things to offer and staying power. the lightweights who got to dress up in heavyweight trunks will be nook nood ... the US is not in any mood to prop them up other than selective cats paw use as ABM sites to needle Russia.

borders, passports, visas and permits will be back in fashion.

Any speculations about the fate of "blue card". I tried to dig but found nothing. I am sure it will be affected but have no idea how.

Singha · Post by **Singha** » 07 Jun 2012 15:39

someone else is in a combative mood:

The President of Estonia slammed Nobel laureate and New York Times columnist Paul Krugman on Twitter today over Krugman's short blog post pooh-poohing the Eastern European country's economic recovery.

Krugman wrote that defenders of Europe's austerity measures often point to Estonia's economic recovery to defend their policies. He included a chart that showed the country's rising GDP and added: "Better than no recovery at all, obviously—but this is what passes for economic triumph?"'

Estonia's president Toomas Hendrik Ilves struck back on Twitter. "Let's write about something we know nothing about & be smug, overbearing & patronizing: after all, they're just wogs," Ilves wrote, using the derogatory British slang term for dark-skinned people from Africa or the East.

"Guess a Nobel in trade means you can pontificate on fiscal matters & declare my country a 'wasteland'. Must be a Princeton vs Columbia thing," he added, referencing the two men's alma maters. (It's unclear when and if Krugman actually called Estonia a wasteland, even though Ilves puts the word in quotes.)
So far, Krugman hasn't joined in the Twitter fight.

abhischekcc · Post by **abhischekcc** » 07 Jun 2012 19:44

Time someone shafted Krudman

Theo_Fidel · Post by **Theo_Fidel** » 07 Jun 2012 21:53

Actually he serves a purpose deliberately by balance the craziness on the right. The vast majority of economist are clustered deep on the right. He has said this many times. The Nobel allows one to start looking at the big picture and what is good for society. WB serves the same purpose. They see problems with inequality deep into the future something the right is too blinded to recognize.

In any case Krugman is right that America survived stronger than Europe by not destroying public investment.

svinayak · Post by **svinayak** » 08 Jun 2012 04:25

Brooksley Born, the Cassandra of the Derivatives Crisis

Brooksley Born, the Cassandra of the Derivatives Crisis

A little more than a decade ago, Born foresaw a financial cataclysm, accurately predicting that exotic investments known as over-the-counter derivatives could play a crucial role in a crisis much like the one now convulsing America. Her efforts to stop that from happening ran afoul of some of the most influential men in Washington, men with names like Greenspan and Levitt and Rubin and Summers -- the same Larry Summers who is now a key economic adviser to President Obama.

She was the head of a tiny government agency who wanted to regulate the derivatives. They were the men who stopped her.

The same class of derivatives that preoccupied Born -- including the now-infamous "credit-default swaps" -- have been blamed for accelerating last fall's financial implosion. But from 1996 to 1999, when Born was the chairman of the Commodity Futures Trading Commission, the U.S. economy was roaring and she was getting nowhere with predictions of doom.

So, upstairs in the big house in Kalorama, Born tossed and turned. She woke repeatedly "in a cold sweat," agonizing that a financial calamity was coming, she recalled one recent afternoon.

"I was really terribly worried," she said.

Before taking office, Born had been a high-octane attorney, an American Bar Association power player, a noted advocate of feminist causes and co-founder of the National Women's Law Center. But none of that carried much weight when she crossed over into government; for all her legal experience, she was a woman who wasn't adept at playing the game. She could be unyielding and coldly analytical, with a litigator's absolute assertions of right and wrong. And she was taking on Beltway pros, masters of nuance and palace politics. She marched into congressional hearing after congressional hearing -- pin neat, always with a handbag -- but no one really wanted to listen.

The Wall Street Journal declared that "the nation's top financial regulators wish Brooksley Born would just shut up." The Bond Buyer newspaper compared her to a salmon "swimming against raging currents."

Theo_Fidel · Post by **Theo_Fidel** » 10 Jun 2012 20:20

Spain has bit the bullet and taken the $125 Billion bailout. As predicted. So who is next. BTW Spain's Public debt has gone from 40% to 80% of GDP. The Spanish PM meanwhile is off to Poland to watch the Football team. Really?

Christopher Sidor · Post by **Christopher Sidor** » 10 Jun 2012 20:53

Last week on BBC, the news presenter was interviewing somebody who claimed that "Germans would be ready to everything in order to save the EURO. They would not say so in public, but could be depended on to do what is right."

Some days later the German Chancellor spoke about a two-speed euro. The problem with this is that Germany might end up keeping PIIGS on life support for a long time. Would that be what is required to restore growth in these PIIGS countries ? Or would it like chemotherapy, a cure worse than the disease itself?

svinayak · Post by **svinayak** » 11 Jun 2012 23:41

http://www.nytimes.com/2012/06/12/busin ... -says.html

Family Net Worth Drops to Level of Early ’90s, Fed Says
By BINYAMIN APPELBAUM
Published: June 11, 2012 Comment

WASHINGTON — The recent financial crisis left the median American family in 2010 with no more wealth than they had in the early 1990s, erasing almost two decades of accumulated prosperity, the Federal Reserve said Monday.
The median family, richer than half of the nation’s families and poorer than the other half, had a net worth of $77,300 in 2010, down from $126,400 in 2007, the Fed said. The crash of housing prices explained three-quarters of the loss.

This vast loss of wealth was compounded by a loss of income, as the earnings of the median family fell by 7.7 percent over the same period.

The new data come from the Fed’s much-anticipated release Monday of its triennial Survey of Consumer Finance, one of the broadest and deepest sources of information about the financial health of American families. The latest survey is based on data collected in 2010. Figures are reported in 2010 dollars.

Unsurprisingly, the report is full of grim news, and although it is news from 18 months ago, fresher sources of economic data make clear that most households have since seen only modest increases, at best, in wealth and income.

Despite these setbacks, consumers have continued to spend surprising amounts of money in recent years, helping to keep the economy growing at a modest pace. The survey underscores where the money is coming from: Americans are saving less for future needs and making little progress in repaying debts.

The share of families saving anything over the previous year fell to 52 percent in 2010 from 56.4 percent in 2007. Other government statistics show that total savings have increased since 2007, suggesting that a smaller group of families are saving more money, while a growing number manage to save nothing.

The survey also found a shift in the reasons that families set aside money, illustrating the lack of confidence that is weighing on the pace of economic growth. More families said they were saving as a precautionary measure, to make sure they had sufficient liquidity to meet short-term needs. Fewer said they were saving for retirement, education or for a down payment on a home.

And the report highlighted the fact that households have made limited progress in reducing the amount that they owe to lenders. The share of households reporting any debt declined by 2.1 percentage points over the last three years, but 74.9 percent of households still owe something and the median amount of the debt did not change.

The drop in reported incomes could have increased the weight of those debts, requiring families to devote a larger share of income to debt payments. But one of the rare benefits of the crisis, lower interest rates, has helped to offset that effect. Families also have been able to reduce debt payments by refinancing into mortgages with longer terms and deferring repayment of student loans.

The survey also confirmed that Americans are shifting the kinds of debts that they carry. The share of families with credit card debt declined by 6.7 percentage points to 39.4 percent, and the median balance of that debt fell 16.1 percent to $2,600.

Families also reduced the number of credit cards that they carried, and 32 percent of families said they now had no cards, up from 27 percent in 2007.

The cumulative statistics concealed large disparities in the impact of the crisis.

The losses of income and wealth fell most heavily on the middle class. Families with incomes in the bottom and top 20 percent of the population sustained smaller losses on a percentage basis than those families in the middle 60 percent.

One reason for this disproportion is that the middle class puts its wealth in housing, and the median amount of home equity dropped to $75,000 in 2010 from $110,000 in 2007. And while other investments have recovered much of the value lost in the depths of the crisis, housing prices have hardly budged.

ramana · Post by **ramana** » 12 Jun 2012 00:24

So US also has two decades of lost prosperity in just two years from 2008 to 2010. The fall is steeper rate than in Japan in the 90s.

paramu · Post by **paramu** » 12 Jun 2012 01:07

Real difference between Japanese and Americans is that Japanese had huge personal savings whereas American has huge debts.

Theo_Fidel · Post by **Theo_Fidel** » 12 Jun 2012 01:44

The American rate is a bit misleading as many things are not included. For instance long term stock capital gains are not included. Much of US organized savings goes into stock market and I have been informed by those who know that it is not included till the stock gains get liquidated.

Indian savings gets eaten by govinment, American gives their companies almost 0% capital.
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The one difference is US is still growing demographically. Also USA did build a heck of a lot of new stuff and imported vast amounts of manufacturing equipment. Economy is now showing real growth. The only battle in USA is over the deficit and how to fund it. And what a battle it is!!

svinayak · Post by **svinayak** » 12 Jun 2012 02:27

Theo_Fidel wrote:The American rate is a bit misleading as many things are not included. For instance long term stock capital gains are not included. Much of US organized savings goes into stock market and I have been informed by those who know that it is not included till the stock gains get liquidated.

Stock portfolio valuation may be fuzzy at this time.

Indian savings gets eaten by govinment, American gives their companies almost 0% capital.
-----------------------------------------------------------

Please dont compare India with US. Two different society and two different culture and traditions. Indians have huge gold savings going over several generations. Indian economy under oppressive colonial system and Indian economy is yet to recover after independence with its colonial policy structure.

The one difference is US is still growing demographically. Also USA did build a heck of a lot of new stuff and imported vast amounts of manufacturing equipment. Economy is now showing real growth. The only battle in USA is over the deficit and how to fund it. And what a battle it is!!

Industrialized economy for more than 100 years should have a better mechanism for financial regulations and excess speculations.

Christopher Sidor · Post by **Christopher Sidor** » 12 Jun 2012 02:31

Acharya wrote:http://www.nytimes.com/2012/06/12/busin ... -says.html
Family Net Worth Drops to Level of Early ’90s, Fed Says
By BINYAMIN APPELBAUM
Published: June 11, 2012 Comment
....
....
The survey also confirmed that Americans are shifting the kinds of debts that they carry. The share of families with credit card debt declined by 6.7 percentage points to 39.4 percent, and the median balance of that debt fell 16.1 percent to $2,600.

Families also reduced the number of credit cards that they carried, and 32 percent of families said they now had no cards, up from 27 percent in 2007.

The cumulative statistics concealed large disparities in the impact of the crisis.

The losses of income and wealth fell most heavily on the middle class. Families with incomes in the bottom and top 20 percent of the population sustained smaller losses on a percentage basis than those families in the middle 60 percent.

One reason for this disproportion is that the middle class puts its wealth in housing, and the median amount of home equity dropped to $75,000 in 2010 from $110,000 in 2007. And while other investments have recovered much of the value lost in the depths of the crisis, housing prices have hardly budged.

The thing about drop in credit cards is good. We, including us Indians and our deficit-loving government, have to stop living beyond our means. In my vicinity too there are cases where people have landed up with 1 lakh or more credit card debt and just paying the minimum account balance. There is even one gentleman who bought a second hand Lancer on his credit card. So in one way the crisis such as the financial crisis of 2008 are good as they help to remove the rottenness from the system.

The problem is that this decrease in credit-card is going to hurt the export oriented economies hard. It would have been better if this restructuring would have been carried out in the boom years of 2003-7, but well better late than never.

Theo_Fidel · Post by **Theo_Fidel** » 12 Jun 2012 02:35

RBI counts gold savings into personal savings, so yes it is already part of the 35% savings rate. There is no comparison at all just a statement of where money is going.

svinayak · Post by **svinayak** » 12 Jun 2012 02:39

Theo_Fidel wrote:RBI counts gold savings into personal savings, so yes it is already part of the 35% savings rate. There is no comparison at all just a statement of where money is going.

Even quoting India is not appropriate.
Even the 2008 financial collapse is a western banking problem and is not an Indian one.
Few speculators have landed in trouble with debt but they are not Indian avaerage.
It is not a India problem but some NRIs in urban area who have personal problem. Indian Banks did not create excesses with wrong lending policy

nachiket · Post by **nachiket** » 12 Jun 2012 03:11

Acharya wrote:
Theo_Fidel wrote:RBI counts gold savings into personal savings, so yes it is already part of the 35% savings rate. There is no comparison at all just a statement of where money is going.
Even quoting India is not appropriate.
Even the 2008 financial collapse is a western banking problem and is not an Indian one.
Few speculators have landed in trouble with debt but they are not Indian avaerage.
It is not a India problem but some NRIs in urban area who have personal problem. Indian Banks did not create excesses with wrong lending policy

I fail to see the point of this post. Theo has not made any of the arguments you talked about. The point he did make is very valid IMHO. Savings in the US are a lot more "productive" so to say as far as the economy is concerned than savings in India. This is not to say that everyone in India should invest in the Stock market rather than gold. It is just laying out the facts.

svinayak · Post by **svinayak** » 12 Jun 2012 04:02

I was not trying to disprove Theo.
It is just that India is not in any of this picture and India has its own internal structural problem which is serious.

Theo_Fidel · Post by **Theo_Fidel** » 12 Jun 2012 04:03

Acharya wrote:Even the 2008 financial collapse is a western banking problem and is not an Indian one.

I think this is a misreading of what happened. There is a lot more going on. This is the story media puts out and is lapped up eagerly. The real underlying issue was the lack of earning power despite rising productivity of American labor. The gains of productivity were all swallowed up by the elites through the financial sector by getting Americans into bigger and bigger homes. This seduced Americans into thinking they were getting richer and into spending more. An ever increasing proportion of their wealth was 'confiscated' by the elites using the financial system while at the same time reducing the average Americans income adjusted for inflation. It is very much a dope dealer and drugee relationship, except GOTUS made it legal by removing all barriers. Problem was not with banking but what elites were trying to do, esp. with respect to risk....

WRT India we escaped due to our 13% bank lending rate.
-----------------------------------------------

India's #1 structural problem is our corporates don't have access to 0% money like everyone else. This makes them excessively cautious despite our 35% savings rate.

svinayak · Post by **svinayak** » 12 Jun 2012 04:06

Theo_Fidel wrote:
Acharya wrote:Even the 2008 financial collapse is a western banking problem and is not an Indian one.
I think this is a misreading of what happened. There is a lot more going on. This is the story media puts out and is lapped up eagerly. The real underlying issue was the lack of earning power despite rising productivity of American labor. The gains of productivity were all swallowed up by the elites through the financial sector by getting Americans into bigger and bigger homes. This seduced Americans into thinking they were getting richer and into spending more. An ever increasing proportion of their wealth was 'confiscated' by the elites using the financial system while at the same time reducing the average Americans income adjusted for inflation. It is very much a dope dealer and drugee relationship, except GOTUS made it legal by removing all barriers. Problem was not with banking but what elites were trying to do, esp. with respect to risk....

This is true. False information about the nature of the economy and zero interest rate after 911 created a huge cash bubble which was used to drive false asset prices everywhere.

ramana · Post by **ramana** » 12 Jun 2012 22:42

Theo, WHy do you think this is so?

India's #1 structural problem is our corporates don't have access to 0% money like everyone else. This makes them excessively cautious despite our 35% savings rate.

Isnt this an age old problem since before Independence? Recall JN Tata going to New York to get bonds for Tata Steel and the drying up of capital after Independence that created the license-quote-permit raj of INC and IAS nexus?

Three people broke the pradigm:

- P.V.N. Rao the Prime Minister
- Dhirubhai Ambani
- Narayna Murthy of Infosys
Now 2Gs loot the wealth and rest on the laurels of these people.

g.sarkar · Post by **g.sarkar** » 13 Jun 2012 08:32

http://www.spiegel.de/international/eur ... 38370.html
06/12/2012
The Next Domino Europe Unprepared as Euro Crisis Deepens
A Commentary by Stefan Kaiser
The weekend announcement that Spanish banks would be bailed out briefly drove up markets around the world. But optimism was short lived. The euro crisis is rapidly intensifying and Europe is not prepared.
The Asian markets are something of a canary in the coalmine when it comes to foreseeing how the day will unfold for European and US financial markets. And on Tuesday, that canary was looking woozy indeed.
After widespread investor optimism on Monday in the wake of the weekend news that Spain would receive up to €100 billion ($125 billion) in emergency aid for its wobbling banks, Tuesday has brought a return to realism. Black stock-exchange numbers have once again nudged back into the red and worries about the survival of the euro zone have returned despite the Spanish bailout.
The apparent skittishness isn't surprising. Greek voters go to the polls on Sunday in an election that many believe could determine whether the country remains in the euro zone or is forced out. Potentially more ominously, numbers released on Monday indicate that the Italian economy is in disastrous shape, having shrunk in the first quarter faster than it has in three years. It is the third quarter in a row that the Italian economy, the euro zone's third largest, has contracted. Many believe that it is merely a question of time before Italy also has to apply for emergency aid from the euro backstop funds.
Meanwhile, despite official optimism from Madrid -- and even from the oft-dour German Finance Minister Wolfgang Schäuble -- it is doubtful that €100 billion will be enough to save Spain's banking industry and put the euro zone back on the road to recovery. For one, recent history has shown just how quickly banks can run into significant trouble should the economic situation rapidly worsen.
More Oversight for Spain
For another, it seems unlikely that the Spanish government will undertake the significant reforms necessary to establish lasting banking-sector stability. Thus far, success has been elusive. For far too long, Madrid painted a rosier-than-warranted picture of the country's banks and made only half-hearted efforts at reform. Prime Minister Mariano Rajoy was far too slow in asking for help from the euro bailout fund.
Indeed, it is now imperative that the troika -- made up of the European Commission, the European Central Bank and the International Monetary Fund -- take over control of banking reform efforts in Spain. Rajoy's fear of outside influence notwithstanding, oversight of Spain must be strengthened. Troika experts must make sure that the bailout money is used wisely and that the banking sector is made more efficient. Such an effort might include closing bank branches and shedding jobs, a task that the government would like to avoid at all costs.
Even if the effort to stabilize Spain's banks is successful, the country and the euro zone are still not out of the woods. The crisis, after all, has long since become much more than a banking crisis, even in Spain.
Both companies and consumers are heavily indebted and are now seeking to pay down that debt -- which reduces both consumption and investment. The tough austerity measures that Madrid introduced under pressure from its euro-zone partners serve to magnify the trend. The result is an economy that has been stuck in recession for months and a catastrophically high unemployment rate of close to 25 percent. And rising........."
Gautam

shyam · Post by **shyam** » 13 Jun 2012 10:37

This Chart Shows The Bilderberg Group's Connection To Everything In The World

image link

Can admins help resize the image? Thx.

shyamd · Post by **shyamd** » 14 Jun 2012 04:56

QE3 next week apparently

Singha · Post by **Singha** » 14 Jun 2012 08:21

germany has told italy to accept the unpopular austerity plan and get with the program now.

Austin · Post by **Austin** » 14 Jun 2012 12:48

Why Euro could continue to fall

Without the cushion of sovereign buyers, the euro has been fully exposed to the risks tied to the debt crisis. It neared a two-year low beneath $1.23 in early June 2012.

As Europe's debt crisis worsens, the euro appears to have lost one of its most reliable sources of demand: foreign central banks. That helps explain why the currency, which appeared to be immune to Europe's troubles at the start of 2012, has since plunged to multi-year lows against the dollar and yen. Some fear it could drop further.

Here are key pointers on the trend:

* Central banks have been one of the sturdiest pillars of support for the euro over the past decade, during which world currency reserves swelled to $10 trillion from $2 trillion, according to the International Monetary Fund. In 1999, the euro comprised 18 percent of reserves of which the currency composition was known, IMF data shows. Its share peaked at 28 percent in 2009 then dipped to 25 percent in 2011.

* Most of the currency is in dollars, but reserve managers worried about over-exposure to the greenback routinely recycled part of the money into other currencies, with the euro the top beneficiary. That trend has stalled because reserve accumulation has dried up as the global economic downturn slows trade. With less money coming in, the need to shift into euros has diminished. Concern about the quality of euro-denominated assets given the deepening problems in the euro zone is also playing a role.

* "Official euro demand is gone and unlikely to return any time soon," said Greg Anderson, North America head of FX strategy at Citigroup. "Without what has arguably been the biggest factor driving the euro/dollar upward over the past 10 years, downside pressures are much more likely to prevail."

* Without the cushion of sovereign buyers, the euro has been fully exposed to the risks tied to the debt crisis. It neared a two-year low beneath $1.23 in early June before rebounding slightly after Europe agreed on a Spanish bank rescue. It was still down more than 5 percent since the start of May.

* Even more troubling, fears about Spain's finances and an upcoming Greek election that could end with Athens quitting the euro has spurred private investors, including Europeans, to dump euros in recent weeks in favor of other currencies, said Jens Nordvig, head of fixed income research at Nomura. If the combination of diminished public and private demand persists, the euro could hit $1.10 in coming months, he said.

* The IMF will not release data on first-quarter accumulation until the end of June. But according to Morgan Stanley, which tracks $9.8 trillion of reserves, growth in overall reserves slowed to a 7 percent pace in April from about 20 percent in September of 2011. Some of the countries with the largest stash of reserves - Japan, Korea, Russia, India and Taiwan - all reported declines in May. China, the largest reserve holder with $3.3 trillion, reported a decline in March, the latest data available showed.

* Brad Bechtel, managing director of FX brokerage Faros Trading in Stamford, Connecticut, whose clients include central banks, said reserve managers in Brazil, Korea and elsewhere have been selling dollars to prevent domestic currencies from weakening excessively as global growth slows. That often obliges them to sell euros as well to maintain the right currency balance in their portfolios. "We are definitely in a low accumulation environment," he said. "Central banks right now are all just playing defense."

* Traders say a lack of sovereign buying was a regular feature in currency markets during the euro's one-way selling in May. In the past, official buyers from Asia or the Middle East were often said to be euro buyers when the currency was losing ground against the dollar. "I think those bids have turned into offers, and that's the true and classic definition of when a bull market turns into a bear market," said Lane Newman, director of foreign exchange trading at ING Capital Markets in New York.

* The explosion in reserves since 2002 has been driven mainly by fast-growing developing countries such as China that buy vast amounts of dollars to keep their own currencies from getting so strong that they make exports too expensive and slow growth. Typically, a share of that would get changed into euros; Citigroup's Anderson estimated as much as 25 percent to 50 percent of incoming dollars would be converted to euros.

* Reserves at emerging market central banks swelled from about $800 billion in 2002 to $6.7 trillion in 2011, IMF data shows. "That's an awful lot of dollars to be diversified," said Simon Derrick, head of currency research at BNY Mellon in London. "When we ask why the euro went from about $0.80 in 2002 to $1.60 by 2008, well, that accounts for quite a lot of it."

* China does not disclose how it invests its massive reserves, but there are signs that suggest it's been a steady euro buyer. Ian Stannard, who heads Morgan Stanley's European FX strategy team, said that since 2008, changes in Chinese reserves and the euro/dollar exchange rate have moved in lock step 73 percent of the time, with the euro rising when reserves rise. But as the Chinese economy cools, so does the pressure on its currency to appreciate, reducing the need for the Chinese to intervene to keep it weak. The yuan posted its biggest monthly decline on record in May, and forward markets imply it will be weaker still in 12 months.

* China is also trying to reorient its economy toward domestic consumption and away from exports. That means it will become more comfortable with a stronger yuan and make it unnecessary to keep buying dollars and euros in an effort to weaken its own currency. That's partly why Nomura expects Chinese reserves to peak in 2014 and start falling in 2015, which would likely hit the euro, causing it to fall against the dollar.

* The selling is not just a numbers game. As fear about Europe's future grows, reserve managers may start to worry about the credit quality and value of euro-denominated assets. The Swiss National Bank cut the euro's share of its reserves to 51 percent through March from 57 percent at the end of 2011, while a recent Central Banking Publications survey of 54 central banks showed 29 percent had cut euro holdings in the past year.

* Even China's giant sovereign wealth fund, which has a higher tolerance for risk and tries to maximize returns on about $400 billion of the country's reserves, said last week it was cutting back on European stocks and bonds.Nomura's Nordvig said appetite for the yen may rise as a result, as could demand for Canadian and Australian dollars. The supply of the latter two currencies is limited, so the biggest beneficiary will probably be the U.S. dollar. "The euro would lose out heavily if its reserve status was starting to change dramatically," said Alan Ruskin, head of G10 FX strategy at Deutsche Bank. "That would have very negative implications."

Yogi_G · Post by **Yogi_G** » 14 Jun 2012 14:28

The politically incorrect fact behind the sub-prime crisis is the influx of Hispanics into the US economy. The attempt at "absorbing" them and wall street's greed led to world-wide shocks. The illegal Bangladeshi migrants into India are partly contributing to our own economic slump as the subsidies program is vote-bank oriented.

pankajs · Post by **pankajs** » 14 Jun 2012 21:53

Spain rates soar on downgrade

UP AND AWAY: Spain's key borrowing rate hit a fresh high Thursday not seen since the country joined the euro in 1999, after Moody's ratings agency downgraded the country to just above junk status.

TOO HIGH: The interest rate — or yield — on the country's benchmark 10-year bonds rose to 6.96 percent in early trading, close to the level that forced Greece, Ireland and Portugal to seek bailouts.

APOCALYPSE, NOT YET: Spain won't immediately collapse if the rate hits 7 percent, but reaching that point would affect it next week when it is scheduled to auction debt.

pankajs · Post by **pankajs** » 14 Jun 2012 21:55

Swiss Central Bank Urges Credit Suisse to Bolster Capital

LONDON – Credit Suisse needs to increase its capital this year to prepare for a potential worsening of the European debt crisis, Switzerland’s central bank said on Thursday.

The Swiss National Bank singled out Credit Suisse in its annual financial stability report as a bank that needs to “significantly expand its loss-absorbing capital during the current year.” Credit Suisse’s local rival, UBS, should just continue with its efforts to strengthen its capital, the central bank said.

Shares of Credit Suisse fell 10 percent in trading in Zurich on Thursday. UBS shares were down only slightly.

“Despite progress achieved, the big banks’ loss-absorbing capital is still below the level needed to ensure sufficient resilience given the high risks in the environment,” the central bank wrote in the report. “The big banks’ importance for the Swiss economy and for financial stability requires that they further strengthen their resilience.”

RamaY · Post by **RamaY** » 15 Jun 2012 07:25

Was listening to NPR/Bloomberg today and two points caught my attention

1. The average family networth fell down from ~$95K to ~$55k since 2008 down turn taking it to the level in 1992. Two lost decades.

2. Churchel was credited with bringing US and UK together during WW2. Apparently he convinced the US's potential to be the great power and how UK can help it in the process. Fast forward 60 years, US is crumbling under its own ambition. Something for Indians who go gaga over US's statements about "India's potential to be a great power and how US can help it to go there".

Bade · Post by **Bade** » 15 Jun 2012 19:00

The politically incorrect fact behind the sub-prime crisis is the influx of Hispanics into the US economy. The attempt at "absorbing" them and wall street's greed led to world-wide shocks.

This is patently incorrect. In fact there was an article in recently (cnn?) on immigration issues which clearly reasoned why this is not the case.

I can see a lot of hispanic immigrants doing all the work that nth gen americans do not want to do. They are not living on dole as it is made out to be on faux news.

Singha · Post by **Singha** » 15 Jun 2012 19:33

some of them were however tempted to buy bigger than income and left high and dry later. but it was a problem across all the lower income band not just hispanic specific.
iirc there was one famous case of a fruit harvester guy in fresno california setting himself up in a $700K house.

http://piggington.com/strawberry_picker ... _yr_income

Bade · Post by **Bade** » 15 Jun 2012 20:13

The average Hispanic guy who buys a large house used them to house multiple families, sometimes not related to each other...almost desi style to get full bang for the buck. It turns out in some counties there are laws against that and it was used to evict them. Even where I live there was a sign in campaign to do the same from my neighbours. I refused to sign in to that. The accusation was that there was drug issues, there was no way for me to verify it. They used footfalls and strangers as the evidence, my argument was it was for the law enforcement to decide that. This was a case of majority white not wanting someone else to raise the flag there. I did not buy into it and maybe did not make new friends.

Theo_Fidel · Post by **Theo_Fidel** » 16 Jun 2012 01:50

4 bedroom + 2bath house does not sound like a mansion at all. The unfortunate thing is that California houses go for these outrageous amounts. The elite groups have completely prevented all reasonable low end housing construction with the result that it is impossible for the poor strawberry picker to buy a cheap home, they simply do not exist. This allows the elite groups to sell their property at outrageous inflated prices to the poor young folk causing a transfer of wealth from the the poor to the rich. When the poor person defaults they loose everything, the elite snap up the property in a closed foreclosed bidding process, mark it up again and sell it again. The real beneficiaciaries are the banks, insurance, legal, developer, elites who make a killing on the poor.

The reason neighbors don't like these multiple family is that it turns into an unfair drain on utilities and resources. Though there is some anti-hispanic sentiment too. Yogi is talking like a MUTU, maybe he is minute man.

Singha · Post by **Singha** » 16 Jun 2012 07:25

US being a power surplus nation, with no real shortage of fresh water or emergency services and schools why would a couple multi family dwellings get the whites agitated so much?
its not like people have to take a pot and queue up before a tap every morning.

Singha · Post by **Singha** » 16 Jun 2012 07:52

I have made the astonishing discovery that the GDP per capita of greece is actually slightly higher than germany and UK!
considering that other than olive oil , fruits and tourism greece has practically nothing to offer to the world, can someone explain how this happened? was it always this way or did easy credit or euro integration somehow contribute to it.

Theo_Fidel · Post by **Theo_Fidel** » 16 Jun 2012 07:52

Singha I hear u but that is not how people think, everything is expensive here....

Everything is paid out of property tax. So 2 families living together with 6 kids means 1 property payment, 6 kids in school. Of course this is A-OK for the white breeder types but not for hispanic types.....
Similarly, water/electricity/sewer/road tax are all either based on dwelling or largely establishment based. For instance my electric bill is 45% establishment cost. Some thing all houses share. Fewer residences means everyone's rates go up. Similarly homeowners insurance, 2 families doubles risk for others, homeowners dues, pool, gym, etc is based on residence not occupant. It is extraordinary frustrating to go to pool for quiet evening only to find 16 kids and family members from 1 house (won't mention race) creating hungama as happened to me last week and I did look at the sign-up sheet. Most americans put up with it, about 20% do something....
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WRT Greece Neshant and I had a long bewildered conversation about that very fact a few pages back. In 1992 Greece per capita was $8,000. So think on that too...
BTW at the peak Ireland per capita income was $65,000. Yes really.

Singha · Post by **Singha** » 16 Jun 2012 09:27

I found this XLS which indicates that might not be true. look at line 69 and 70 for germany and greece. there is still a huge gap. the early 90s greece per capita is listed as $15k

http://www.ers.usda.gov/data/macroecono ... Values.xls

being from US govt the data looks credible.

shyam · Post by **shyam** » 16 Jun 2012 11:32

People who believe that gold a worthless piece, please note this convoluted game.

A golden idea to save (or doom) the euro

Germany’s idea is coyly named the European Redemption Pact and it is nothing if not creative. While details are scant, here is roughly how this gilded baby would work. Countries with debts greater than 60 per cent of gross domestic product – the (ignored) limit under the European Union’s Maastricht Treaty – would transfer those debts into a redemption fund, which would be covered by joint bonds. The scheme has been called “euro bonds lite.”

Here’s the catch. Countries using the scheme (most would, including Germany, because of generally high debt-to-GDP ratios) would have to cover 20 per cent of their debt with collateral, payable in gold or currency reserves. Default on the payments and you lose your gold. The “sinking” fund would retire the debt over 20 years.

Ultimately, gold rules! By accepting fiat money printed from thin air, some countries are likely to lose their true money - gold. Current bail out only increases the debt load of those countries, which they will have to default at some point.

shyam · Post by **shyam** » 16 Jun 2012 11:44

This is day light robbery by ECB....

For Europe’s sake Greece must renege on its bailout commitments – my op-ed in Le Monde

1.A week ago the bankrupt Greek state borrowed 4.2 billion from Europe’s bailout fund (the EFSF) and immediately passed it on to the European Central Bank (ECB) so as to redeem Greek government bonds that the ECB had previously purchased in a failed attempt to shore up their price. This new loan boosted Greece’s debt substantially but netted the ECB a profit of around 840 million (courtesy of the 20% discount at which the ECB had purchased these bonds).

2.During the same week, the fiscally stressed Spanish government was injecting large amounts of capital into Spanish banks. Simultaneously, to help finance the Spanish state, the ECB has provided large loans to Spanish banks (at 1% interest rate) which they then re-lent to their ‘saviour’, i.e. the Spanish state, at interest rates often exceeding 6%. {We know that this happens in uncle land}.