Global Economy

Singha · Post by **Singha** » 28 Sep 2008 12:07

the new agreement on bailout due out on sunday night EST is said to include limits on
executive compensation.
lets see how much of a sellout it is.

SK Mody · Post by **SK Mody** » 28 Sep 2008 12:11

paramu wrote:Britain's Brown wants new global financial order

... international movements of capital to be transparent," Brown said.

... including increased transparency, regulation,

... new global financial order founded on transparency, not opacity,

Does he mean "transparency" in the computer programming sense?

Singha · Post by **Singha** » 28 Sep 2008 21:37

I think congress would have wetted their pants as the voice came on the phone

CNN:

WASHINGTON (CNN) -- Billionaire Warren Buffett told congressional negotiators that if they can't agree on a proposed financial bailout, the nation will face "its biggest financial meltdown in American history," two sources familiar with the talks said.

Word of Buffett's omen came as House Speaker Nancy Pelosi announced "great progress" in reaching a deal on the White House's proposed $700 billion bailout of the financial system.

Buffett, whom Forbes magazine has placed at No. 2 on its 2008 list of richest Americans, was one of several business experts whose opinions were sought, Sen. Kent Conrad, D-North Dakota, told reporters Saturday.

Nandu · Post by **Nandu** » 29 Sep 2008 03:36

IMHO, Buffet doesn't have credibility on this because he stands to directly benefit from the bailout. He just took a huge stake in Goldman Sachs.

Neshant · Post by **Neshant** » 29 Sep 2008 05:22

he means berkshire hathaway will face the biggest financial meltdown if this handout is not passed.

Sanjay M · Post by **Sanjay M** » 29 Sep 2008 05:22

This is true, but there'll be a bailout nonetheless. He may not be the most impartial on this issue, but he's not wrong on it, either.

Satya_anveshi · Post by **Satya_anveshi** » 29 Sep 2008 09:07

Bush, Congressional Leaders Back Financial Rescue: http://www.bloomberg.com/apps/news?pid= ... refer=home

WSJ is reporting a done deal: http://online.wsj.com/article/SB122257682963083173.html

Satya_anveshi · Post by **Satya_anveshi** » 29 Sep 2008 09:22

Financial Troubles Humble U.S. { subscription required}

The success of the pending rescue of the U.S. financial system probably depends as much on the central banks of China and the Middle East as on Congress and the Federal Reserve.
The U.S. is turning to foreign governments and other overseas investors to buy a good chunk of what could total $700 billion in Treasury debt expected to finance the bailout.

China, Saudi Arabia and other big foreign holders are unlikely to take antidollar measures precisely because they own so much U.S. debt. To the extent the dollar declines, so does the value of those nations' holdings. Mr. Summers calls this situation "the financial balance of terror."

I will not be surprised by the suckers who will come forward jumping head over heals to bail US out and will say "thank you" in return. No prizes for guessing what MMS would have done in DC and at this time; US Congress would have extracted you know what.

Philip · Post by **Philip** » 29 Sep 2008 12:29

Gordon Brown's had his boom, now he's bust says David Cameron

"...Mr Brown had had his boom, but that his reputation was now bust."

“We have to ask the question, who brought us and our economy to this position? Who was it that spent and spent and borrowed and borrowed and gave us that massive Budget deficit? Who was it who said that he, and he alone, had rewritten the laws of economics to end boom and bust? The answer is our Prime Minister, the then Chancellor, Gordon Brown.”

http://www.timesonline.co.uk/tol/news/p ... 842602.ece

The first tragic human casualties of this great financial catastrophe.

http://www.independent.co.uk/news/uk/ho ... 45274.html

City banker throws himself in front of train

By Simon Evans
Monday, 29 September 2008

Official! Bradford & Bingley will be nationalised
Bradford & Bingley: the deal at a glance

Jeremy Warner: How many more will have to be saved?
Congress to vote today as compromise reached on US rescue
Osborne calls for tougher financial regulation

Fortis could become the credit crunch's first eurozone victim
Andreas Whittam Smith: Building societies should never have gone public

Leading article: The economy changes the calculations for Mr Cameron
George Bush: The $700bn bailout is aimed not at Wall Streeet but 'your street'

Taxpayers run risk of a £1 trillion burden

Stephen King: In Mexico, they've seen it all before. And there are lessons for all of us

Wachovia's fate in balance as takeover deal falters
Desperate bid to avert bloodbath on the stock market
Ministers in £40bn bailout of B&B

The head of one of the City's most successful private equity firms has killed himself. Kirk Stephenson, 47, chief operating officer at Olivant, died on Thursday after throwing himself in front of a train near Taplow station in Buckinghamshire.

Mr Stephenson's wife, Karina Robinson, said the New Zealand-born financier was "a dedicated father and a devoted husband," adding: "He valued his family above all else."

Luqman Arnold, chief executive of Olivant, said: "Everyone has been devastated by the news of Kirk's death. Our thoughts and prayers are with his family."

A source said: "I imagine, like most high-flying bankers, he will probably have lost a lot of cash recently as a result of the credit crunch. It appears the pressure became too much to bear."

Olivant, set up in 2006, came to prominence earlier this year as one of the potential bidders for Northern Rock.

SwamyG · Post by **SwamyG** » 29 Sep 2008 18:41

Citigroup buys Wachovia's banking business.

I don't like the way things are shaping - 3 banks JP Morgan, CitiGroup and BoA now have lots of deposits - Monopoly. Some thing happens to one, others will be impacted. Yeah, let us just keep putting all eggs in few baskets. Good idea.

Rumors are that Indian IT is getting affected. Salaries are coming down, real estate prices are coming down. But the chaval and dal will remain high.

svinayak · Post by **svinayak** » 29 Sep 2008 21:08

SwamyG wrote:Citigroup buys Wachovia's banking business.

I don't like the way things are shaping - 3 banks JP Morgan, CitiGroup and BoA now have lots of deposits - Monopoly. Some thing happens to one, others will be impacted. Yeah, let us just keep putting all eggs in few baskets. Good idea.

Rumors are that Indian IT is getting affected. Salaries are coming down, real estate prices are coming down. But the chaval and dal will remain high.

Which IT firms have high exposure to Wall st.

Infosys , HCL have high exposure.

TCS, Satyam and Wipro have moderate exposure

svinayak · Post by **svinayak** » 29 Sep 2008 23:25

U.S. Stocks Plunge After House Votes Against Bailout Plan

By Eric Martin

Sept. 29 (Bloomberg) -- U.S. stocks plunged and the Standard & Poor's 500 Index tumbled the most since 1987 after the House of Representatives voted down a $700 billion plan to rescue the financial system.

Sovereign Bancorp Inc. tumbled 66 percent and National City Corp. slid 52 percent, leading financial shares in the S&P 500 to an 11 percent slide. The MSCI World Index of 23 developed markets sank 6 percent, the most since its creation in 1970.

``It's pretty much a nightmare,'' said Michael Nasto, the senior trader at U.S. Global Investors Inc., which manages $5 billion in San Antonio. ``This is the worst we've seen it since the credit mess started. Until we know exactly why they didn't pass it, we're going to be selling off for a while.''

The S&P 500 sank as much as 87.02 points, or 7.2 percent, to 1,125.99. The Dow Jones Industrial Average slid 631.13, or 5.6 percent, to 10,512 at 2:09 p.m. The Nasdaq Composite Index declined 148.4, or 6.8 percent, to 2,034.94.

SwamyG · Post by **SwamyG** » 30 Sep 2008 00:29

Massacre..... as they would say in tamil 'tundu kanom, tuni kanom' {meaning: things are really bad;}

svinayak · Post by **svinayak** » 30 Sep 2008 00:41

House Rejects Bailout; Stocks Plummet

09/29/08 - 02:42 PM EDT

Updated from 2:08 p.m. EDT

Stocks on Wall Street took a blood bath Monday afternoon after the Treasury Department's proposed aid package for the financial sector failed to pass the House of Representatives.

The Dow Jones Industrial Average, which fell as much as 705 points, was lately down 448 points to 10,695, and the S&P 500 lost 66 points to 1147. The Nasdaq plummeted 134 points to 2050. The Dow was taking swings of more than 100 points in the minutes immediately following the vote.

The $700 billion proposal, formally presented last week by Treasury Secretary Henry Paulson, failed to garner sufficient votes to make it through the House of Representatives. The package, which would have set up a facility to use government money to buy troubled assets from financial firms, was voted down with an initial tally of 205 votes for the bill to 228 against. The controversial piece of legislation had earlier been expected to make it through. A total of 218 votes were required to pass the bill.

The sharp decline in the major indices is "strictly in response to Congress not passing the TARP," said Michael Strauss, chief economist and strategist at Commonfund. "The question is, are they going to get back together and try to get something through?" Strauss said the general expectation is that Congress will have to reconvene and try to pass some legislation to help the credit markets.

"This is a wholesale dumping of stocks," said Robert Pavlik, chief investment officer with Oaktree Asset Management. "The Street is trying to indirectly send a message that if this thing doesn't get passed, you'll be faced with a wholesale market selloff, anything across the board."

shaardula · Post by **shaardula** » 30 Sep 2008 00:47

John Snow · Post by **John Snow** » 30 Sep 2008 01:11

Folks, My reading is that the natural equilibrium for the Dow is around 8800 - 9000.
Those of fellow BR members who invest in MF in US on regular basis should stop buying, except employee contributed parts of 401 k, an additional amounts of disposable income should go into FDIC insured preferably joint accounts as it is insured upto 200,000.
Dont build too much equity into your home by sending extra cash. Think twice and try to amass liquid cash, there are bargains around till feb of 2009.

I had to buy a car and I got Acura TL with Navi for 31,000 out of the door, 2008 new no not a demo car, brand new. I wanted a ES350 fully equipped of 39,800 before tax, he came down to 34, 700 but plus tax. Eventhough I thought ES was better, than TL (3.2).

Cash is the king please keep it dry and ready to cherry pick. Camry LE you can get out of the door for 15,500 if do your home work and negotiate. All automotive companies are starved.

Oh by way even though I have out right cash to buy my car, I am going with 0.9% finance with bare minimum down payment.

Negotiate Negotiate Negotiate, Cash Cash Cash.

Wish I was on Nuke team

This my reading invidual cases may differ, consult you Financial advisor and invest prudently etc etc. as Suzie orman says

People First
Money next
then Mortgage
*****
Bhai log the banks are desparate for cash, so you as a consumer (with cash and savings)
have ultimate power.

All big ticket items can be bought at a very cost + wafer thin margins. Dont be afraid like MMS from walking away from deals.

They need your money, not a dime extra if you dont see value.

Remember the Marry popins scene, thats what is ahppening.

****
--------------------------------------------------------------------------------
Mr. Dawes Jr: In 1773, an official of this bank unwisely loaned a large sum of money to finance a shipment of tea to the American colonies. Do you know what happened?
George W. Banks: Yes, sir, yes I think I do. As the ship lay anchored in Boston Harbor, a party the colonists dressed as red Indians boarded the vessel, behaved very rudely, and threw all the tea overboard. This made the tea unsuitable for drinking. Even for Americans.
Mr. Dawes Jr: Precisely. The loan was defaulted. Panic ensued within these walls. There was a run on the bank.
Mr. Dawes Sr.: From that time to this, sir, there has not been a run on this bank... UNTIL TODAY. A run, sir, caused by the disgraceful conduct of your son, do you deny it?

--------------------------------------------------------------------------------

The cause of Sub prime secret is here

Michael: I want it to feed the birds.
Mr. Dawes Sr.: Fiddlesticks, boy! Feed the birds and what have you got? Fat birds! But...
[sings]
Mr. Dawes Sr.: If you invest your tuppence wisely in the bank, safe and sound, soon that tuppence, safely invested in the bank, will compound! And you'll achieve that sense of conquest, as your affluence expands! In the hands of the directors, who invest as propriety demands!

rsingh · Post by **rsingh** » 30 Sep 2008 11:57

Gurus, My bank ( Belgian bank Dexia) has decided to reach for the bottom. It lost 30
% in one day. Belgian govt is about to decide it is going to help with bailout. I do not have any shares of bank but my business credit lines are with it. Daily cash handling and card payments are received by the same bank. What is the worst case scenario for me.

shyam · Post by **shyam** » 30 Sep 2008 12:20

Nothing new in this video for BR gurus, but it is interesting to watch SJM's take on "Global Imbalance - An imminent Dollar Crisis"

SK Mody · Post by **SK Mody** » 30 Sep 2008 16:21

Thousand thanks, Shyam, for posting that video - a must watch for anyone who understand plain language. Really made my day.

Added later: Admins, can this highly educational video be permanently archived in the very first post of this thread. Thank you.

SK Mody · Post by **SK Mody** » 30 Sep 2008 17:20

What a brilliant talk. MR Venkatesh gives the phrase "Economics Guru" the meaning it deserves.

AshokS · Post by **AshokS** » 30 Sep 2008 19:04

Saw the video, too much rhetoric and America bashing. He misses the point on why countries invest in t-bills vs other options. Less economics and more polemics in my opinion.

vsudhir · Post by **vsudhir** » 30 Sep 2008 19:11

Financial crisis: Western world will become significantly less wealthy (UK Telegraph)

This is the secondary headline

Corporate America has just lost a chunk of its value the size of the Indian economy.

vsudhir · Post by **vsudhir** » 30 Sep 2008 20:52

SK Mody · Post by **SK Mody** » 30 Sep 2008 20:58

AshokS wrote:Saw the video, too much rhetoric and America bashing. He misses the point on why countries invest in t-bills vs other options. Less economics and more polemics in my opinion.

For us common abdul's, it was a bit of welcome plain talk.

Satya_anveshi · Post by **Satya_anveshi** » 30 Sep 2008 21:27

SK Mody wrote:
AshokS wrote:Saw the video, too much rhetoric and America bashing. He misses the point on why countries invest in t-bills vs other options. Less economics and more polemics in my opinion.
For us common abdul's, it was a bit of welcome plain talk.

Not just that, I wish all parliamentarians much be locked inside the parliament (at gun point if needed) and should be shown this video. Ofcourse, for students at 12th and graduate level students must be made mandatory.

Agreed the video is crude for the posh folks like AshokS, who is bothered about America bashing. It is a different matter that author is almost alleging America of sucking the blood of poor people. Touche!! What sensibilities!!

As regards to "why countries invest in t-bills", author does spend quite a bit of time on the need of improving consumerism in the nation and provides examples from culture that can be leveraged.

svinayak · Post by **svinayak** » 30 Sep 2008 21:46

It is a good video since it exposes 'globalization'.
Globalization is nothing but another rhetoric similar to socialism and others in the past. India being part of the colonialism in the past was already part of the globalized world. After Independence India is trying to get into the world trading system which is controlled by the western powers. This monopoly is going to be shattered and that is what is explained in the video.

This crony capitalism and western controlled globalization is going to wither away and a new system will evolve.

SwamyG · Post by **SwamyG** » 30 Sep 2008 22:22

The video explains the issues in very simple terms. It is refreshing. He begins by saying that it is not America bashing, but does touch topics that looks like America bashing. We need to look at it and see if there is any validity in his accusations. For example, he gets into little unnecessary areas about step-brother etc, he could have kept it straight - how change in family is affecting the economy. There is some truth, America is huge consumption economy, where everybody spends happily using credit. Definitely American culture has role in how America and global economies are shaped. I think Venkatesh highlighted that in a witty manner. What to do, it does cause some takleef.

When he suggested increased consumption in India, I thought there goes another person asking us to spend spend. But I was relieved to note that he differentiates between consumption and "responsible consumption". His judgment on the roles women play in family and nation once again shows why we are saving. I hope our savings continue to have a good percentage.

Out of the 56+ mins of the video, we could say there was 6-10 mins of taking shots at America. Ignoring the noise, I would say we got at least 45+ mins of quality viewing.

Go India....

Satya_anveshi · Post by **Satya_anveshi** » 30 Sep 2008 22:50

He was addressing Swadeshi Jagaran Manch and audience needs something that they can relate to, that they can feel pride of what they have when they see in context of what others. Think about common denominator. How different it is when all people with turban are accused of being terrorists or terrorist sympathisers in the much educated segments in massland.

Suraj · Post by **Suraj** » 01 Oct 2008 01:21

Enough with the nukkad on this thread please. I will delete future posts and clean up.

SwamyG · Post by **SwamyG** » 01 Oct 2008 20:43

Systemic Banking Crises: A New Database. This is a working paper from IMF. {PDF file}

Sanjay M · Post by **Sanjay M** » 02 Oct 2008 06:40

News Update:

US Senate has just passed a new version of the economic bailout bill. The bill was apparently loaded with tax breaks and pork-barrel concessions to various senators, in order to induce more votes for the passage of the bill.

Now it remains for the bill to go before the House of Representatives, to see if they will pass it.

Nayak · Post by **Nayak** » 02 Oct 2008 12:22

The house of representatives has passed the bail-out plan. Stock markets will breathe easier.

Nandu · Post by **Nandu** » 02 Oct 2008 14:03

Not yet, Nayak. It has only passed the Senate so far.
Though, this pork laden behemoth bill will likely pass the House soon. More is the pity.

Nayak · Post by **Nayak** » 02 Oct 2008 15:39

Thomas L. Friedman: Rescue the rescue
By Thomas L. Friedman
Wednesday, October 1, 2008

http://www.iht.com/bin/printfriendly.php?id=16613898

I was channel surfing on Monday, following the stock market's nearly 800-point collapse, when a commentator on CNBC caught my attention. He was being asked to give advice to viewers as to what were the best positions to be in to ride out the market storm. Without missing a beat, he answered: "Cash and fetal."

I'm in both - because I know an unprecedented moment when I see one. I've been frightened for my country only a few times in my life: In 1962, when, even as a boy of 9, I followed the tension of the Cuban missile crisis; in 1963, with the assassination of JFK; on Sept. 11, 2001; and on Monday, when the House Republicans brought down the bipartisan rescue package.

But this moment is the scariest of all for me because the previous three were all driven by real or potential attacks on the U.S. system by outsiders. This time, we are doing it to ourselves. This time, it's our own failure to regulate our own financial system and to legislate the proper remedy that is doing us in.

I've always believed that America's government was a unique political system - one designed by geniuses so that it could be run by idiots. I was wrong. No system can be smart enough to survive this level of incompetence and recklessness by the people charged to run it.

This is dangerous. We Americans have House members, many of whom I suspect can't balance their own checkbooks, rejecting a complex rescue package because some voters, whom I fear also don't understand, swamped them with phone calls. I appreciate the popular anger against Wall Street, but you can't deal with this crisis this way.

This is a credit crisis. It's all about confidence. What you can't see is how bank A will no longer lend to good company B or mortgage company C. Because no one is sure the other guy's assets and collateral are worth anything, which is why the government needs to come in and put a floor under them. Otherwise, the system will be choked of credit, like a body being choked of oxygen and turning blue.

Well, you say, "I don't own any stocks - let those greedy monsters on Wall Street suffer." You may not own any stocks, but your pension fund owned some Lehman Brothers commercial paper and your regional bank held subprime mortgage bonds, which is why you were able refinance your house two years ago. And your local airport was insured by AIG, and your local municipality sold municipal bonds on Wall Street to finance your street's new sewer system, and your local car company depended on the credit marks to finance your auto loan - and now that the credit market has dried up, Wachovia bank went bust and your neighbor lost her secretarial job there.

We're all connected. As others have pointed out, you can't save Main Street and punish Wall Street anymore than you can be in a row boat with someone you hate and think that the leak in the bottom of the boat at his end is not going to sink you, too. The world really is flat. We're all connected. "Decoupling" is pure fantasy.

I totally understand the resentment against Wall Street titans bringing home $60 million bonuses. But when the credit system is imperiled, as it is now, you have to focus on saving the system, even if it means bailing out people who don't deserve it. Otherwise, you're saying: I'm going to hold my breath until that Wall Street fat cat turns blue. But he's not going to turn blue - you are, or we all are. We have to get this right.

My rabbi told this story at Rosh Hashana services on Tuesday: A frail 80-year-old mother is celebrating her birthday and her three sons each give her a present. Harry gives her a new house. Harvey gives her a new car and driver. And Bernie gives her a huge parrot that can recite the entire Torah. A week later, she calls her three sons together and says: "Harry, thanks for the nice house, but I only live in one room. Harvey, thanks for the nice car, but I can't stand the driver. Bernie, thanks for giving your mother something she could really enjoy. That chicken was delicious."

Message to Congress: Don't get cute. Don't give us something we don't need. Don't give us something designed to solve your political problems. Yes, Henry Paulson and Ben Bernanke need to accept strict oversights and the taxpayer must be guaranteed a share in the upside profits from all rescued banks. But other than that, give them the capital and the flexibility to put out this fire.

I always said to myself: Our government is so broken that it can only work in response to a huge crisis. But now we've had a huge crisis, and the system still doesn't seem to work. Our leaders, Republicans and Democrats, have gotten so out of practice of working together that even in the face of this system-threatening meltdown they could not agree on a rescue package, as if they lived on Mars and were just visiting us for the week, with no stake in the outcome.

The story cannot end here. If it does, assume the fetal position.

Nayak · Post by **Nayak** » 02 Oct 2008 15:59

More doom and gloom

U.S. economy troubles hit a worry-free zone for the rich
By Robbie Brown
Wednesday, October 1, 2008

http://www.iht.com/bin/printfriendly.php?id=16608201

SEA ISLAND, Georgia: Four years ago, when President George W. Bush was the host of a summit meeting of world leaders on this tiny, privately owned resort island, bestowing prestige and bringing increased tourism, Sea Island seemed recession-proof.

So confident in the future were the owners of the high-priced resort that they poured $350 million into renovations. They opened upscale restaurants. They built waterfront suites costing $5,000 a night. They installed a 100-seat movie theater, a spa, a wine cellar, equestrian facilities and three new pools.

Business boomed, and superlatives accumulated: Condé Nast Traveler named Sea Island among the "World's Best Places to Stay," and Golf Digest called it the best golf resort in North America.

But those days seemed ancient last month when the resort's owner, the Sea Island Co., fired about 500 employees, nearly 25 percent of the workforce, to stanch its financial losses amid the national downturns in tourism and real estate. Those who were dismissed ranged from cabana waiters to senior executives.

To many residents, the island has become a cautionary tale.

If a falling tide lowers all boats, they say, then Sea Island's woes reveal the faltering economy's toll on even the wealthiest, best-protected regions of the United States.

"Now we know how Detroit feels," said Harry Aiken Jr., a bar operator on neighboring St. Simons Island. "Everybody knew Sea Island was overextended, but we thought they could always just sell more property."

In many ways, Sea Island still seems a breezy, worry-free Old South getaway. The cost of the islands' homes averages $3.2 million, according to the Sea Island Co. Brooks Brothers could stock its catalogue with Sea Island's bronzed, shapely (and almost exclusively white) bodies. And politicians, professional athletes and CEOs still dream of retiring to Sea Island and its manicured, oak-studded mansions, called cottages.

But the island has attracted fewer business conferences than usual this year, said Brian Young, the resort's general manager, although personal travel has remained relatively steady.

And although houses are selling, including one for more than $4 million this month, C. Allen Brown, the company's vice president for real estate, said he had "never seen this many potential buyers waiting on the sidelines."

Fifty of the 600 houses on Sea Island are for sale, Brown said, compared with fewer than 35 this time last year.

In the sun-baked towns that surround Sea Island and rely on its high-spending clientele, people have noticed a slump in business and want to know what caused it: the national economy, natural cycles in the life of a resort or poor financial decisions?

The economy was only one reason for the cutbacks, said the chief executive of the Sea Island Co., Bill Jones 3rd. Seasonal employees were dismissed as summer crowds died down, and many people hired during the renovation were no longer necessary, he said. But he acknowledged the economy's significant role.

"Folks are waiting for the market to bottom out," Jones said. "They say, 'Until we find out where this economy is going, we can't move down here,' and I don't blame them."

But some residents say local miscalculations, not the national economy, caused the layoffs. (Fired employees signed agreements with Sea Island not to publicly discuss the causes or conditions of their dismissals, several former employees said.)

From 1998 to 2006, Sea Island underwent a sweeping renovation, updating three golf courses and adding a 65,000-square-foot, or about 6,040 square-meter, spa and fitness center, a 2,000-bottle wine cellar and other costly accommodations. Then the economy turned sour.

"Rich as they were, there was a real naïveté about money," Nancy Thomason, the longtime owner of a second-hand bookstore on St. Simons, said of the Sea Island Co. "They were used to being millionaires and playing that game, but they didn't have the money."

Since its development in the 1920s, Sea Island has attracted a well-heeled and powerful clientele, including six U.S. presidents. In recent years, homeowners have included the former Attorney General Griffin B. Bell, the Atlanta Braves pitcher John Smoltz and the former CBS News anchor Bob Schieffer.

So the For Sale signs and staff cuts cabled a frightening message to other resort owners: If it can happen here, it can happen anywhere.

"I think everyone is tightening their belts," said Jim Sprouse, executive director of the Georgia Hotel and Lodging Association. "It's an industry-wide issue as people slow down their travel."

The greatest slump has been in real estate.

In the areas surrounding Sea Island, the average home sold for $17,000 less this year than it did last year and took three weeks longer to sell, said R. Frederick Stroud, a broker at Georgia Coast Realty.

The problem is not a lack of interest in buying houses on the Golden Isles, Stroud said. Instead, banks that would normally issue loans for second homes are tightening their standards amid the national financial crises. With fewer people qualifying for loans, only the wealthiest buyers can afford Sea Island homes.

Sea Island's defenders say the company deserves the community's support. The Jones family, which has owned the resort for 80 years, is "the backbone of the hospitality industry," said Woody Woodside, president of the local chamber of commerce.

"The jobs they've created, the taxes they've created, that's one thing," he said. "But the indirect impact - it reaches every corner of this island. The whole island is in support of a rally by Sea Island."

But the firings have worsened class rivalries in a region of great extremes of wealth.

"Down here, it's really rich people and it's poor people," said Aiken, the bar operator on St. Simons, gesturing toward Sea Island. "A lot of people over here are envious of people over there. And now Sea Island employees, who don't live there, are paying the price."

Neshant · Post by **Neshant** » 02 Oct 2008 23:28

> We're all connected. As others have pointed out, you can't save Main Street and punish
> Wall Street anymore than you can be in a row boat with someone you hate and think that
> the leak in the bottom of the boat at his end is not going to sink you, too. The world really i
> is flat. We're all connected. "Decoupling" is pure fantasy.

They are shifting the leak in the boat at the corporation's end to the taxpayer's end. If everything in coupled as they claimed, then doing that is just as idiotic.

Bank of America recently merged with Merill Lynch in one weekend. There is no way Bank of America could possibly understand the balance sheet of Merill Lynch in one weekend. The only reason for the merger is because both are failing and they hope that by getting bigger they will be declared "too big to fail" and get a bailout.

Lots of scams going on.

Kakkaji · Post by **Kakkaji** » 02 Oct 2008 23:40

Buffett: My fix for the economy

Investment guru proposes his own solution to the credit crisis after warning that the $700 billion bailout may not be large enough.

By Chris Isidore, CNNMoney.com senior writer
Last Updated: October 2, 2008: 1:51 PM ET

(Fortune) -- Warren Buffett said Thursday the pricetag of the controversial $700 billion Wall Street bailout may have to rise, and suggested that Treasury team with private investors to buy the distressed mortgage assets at the center of the rescue plan.

Buffett, the chairman and CEO of Berkshire Hathaway (BRK.A), likened the recent turmoil in the markets to an "economic Pearl Harbor" and said that the economy needs a quicker response than Congress has provided.

"It will cost more to solve this problem today than it did two weeks ago," said Buffett, referring to when Treasury Secretary Henry Paulson's first proposed that Congress help rescue Wall Street, which has seen the collapse of Lehman Brothers and Bear Stearns and the sale of Merrill Lynch. "It's that bad. If we don't get it solved next week, I may go back to delivering papers."

He didn't estimate how much more money would be needed to buy enough toxic mortgage investments in order to create a more stable market and get credit flowing.

But Buffett described a plan he thought of Thursday morning on the way to the Summit that would allow Treasury and private investors to buy assets together. He said his proposal would quickly kickstart demand for mortgage-backed securities and help find a market price for these troubled assets.

"One easy way to do part of the program is to say to anybody - hedge fund operators, Wall Street firms, or anybody else - that the Treasury will lend you 80% of the purchase cost of a bunch of distressed assets," he said, explaining the concept of his proposal. The investors benefit from borrowing at lower rates, but Treasury would get first claim on the sale of those assets, which means it would get its loan back plus interest and possibly turn a profit.

"Now you have someone with 20% skin in the game," he explained. "Believe me, I won't be overpaying if I'm buying with that kind of leverage. And you have someone [the investors] to manage the assets to the extent they need to be managed."

Buffett said that the bill that passed the Senate Wednesday evening isn't perfect, but that it's crucial to prevent the global economy from grinding to a halt. He then warned it will take a while to work and that the economy is going to struggle even with its passage.

He said the problems now facing the economy are unprecedented, and likened the the crisis to a great athlete that has had a massive heart attack.

"We've never seen anything like this where perfectly credit-worthy companies can't get funds," he said.

"Anyone who thinks this bill is a panacea is [making] a mistake," he said. "Without it, it's a disaster."

shaardula · Post by **shaardula** » 03 Oct 2008 00:52

Warren Buffet On Charlie Rose

Must watch for all those who watched M.R.Venkatesh.

PS: features yet another american exceptionalism question from charlie rose.

Atish · Post by **Atish** » 03 Oct 2008 18:53

MR Venkatesh is a simplistic man. A lot of what he says is what people want to believe. I stopped watching when he came up with the silly idea that "rich people should lend to poor people". This is an idea that sounds intuitively correct, but has noi real rational or historical basis. If assumptions are flawed, I am not interested in theories.

Atish.

SwamyG · Post by **SwamyG** » 03 Oct 2008 19:18

I stopped watching when he came up with the silly idea that "rich people should lend to poor people". This is an idea that sounds intuitively correct, but has noi real rational or historical basis.

Is there a snark? If not read on....

So if rich people do not lend to poor, do you think it should be the other way around? Or is your point about the word "should"? Can I say, you stopped watching because he is not saying what you believe in?

ps: Did you read about Krishnammal and the Alternative Nobel Prize making news?