Global Economy

Singha · Post by **Singha** » 17 Oct 2008 21:30

BBC - another LCC down

Spanish airline suspends flights
LTE website announcing suspension of flights

Spanish-based airline LTE International has suspended operations after telling Spanish authorities that it was in serious financial difficulty.

LTE's website stopped taking bookings late on Thursday after it said it could not cover costs for the next few days.

The company said several thousand passengers had been affected by the cancellation of flights, including some who were stranded in Spain.

LTE runs flights from Spain to the UK, Italy and Saudi Arabia.

It has 300 staff and a fleet of seven Airbus 320s.

Neshant · Post by **Neshant** » 17 Oct 2008 21:48

looks like rules of the game are about to be rewritten.

we have been invited to dine at the high table. hopefully they won't stick us with the bill.

------------
Global crisis: EU, G-8 want India & China to join emergency summit
October 16, 2008 18:38 IST
Yahoo News

Thu, Oct 16 09:35 PM

Brussels, Oct.16 (ANI): The European Union and the Group of Eight countries want India to join in an emergency global summit to devise strategies to tackle the global financial crisis and overhaul the world's financial system.

http://in.news.yahoo.com/139/20081016/8 ... gency.html

Singha · Post by **Singha** » 17 Oct 2008 22:19

I would think the gulf and east asian moneybags for the dollar also be invited.
uae, saudia, south korea, taiwan....pakistan is going to demand a seat too as
the self-appointed 'leader' of the islamic world.

Singha · Post by **Singha** » 17 Oct 2008 22:32

people burn billions like cigars these days

NYT-

French Bank Suffers $807 Million Trading Loss

By MATTHEW SALTMARSH
Published: October 17, 2008

PARIS — A large French mutual bank, Groupe Caisse d’Épargne, said Friday that it had lost 600 million euros, or $807 million, as a result of unauthorized derivatives trading by a team on the bank’s own account.

The lender, which is in merger talks with a French rival, said in a statement that the loss was the result of “extreme market volatility” on stock exchanges last week, and that the position had been closed.

Speculation of a big derivatives loss at a large bank rattled the stock exchanges in Paris last week, adding to downward pressure on banks’ shares and forcing rival lenders Société Générale and Dexia to issue denials.

The incident “does not affect the financial solidity of the group and will have no consequences on clients,” the bank said, adding that it retains more than 20 billion euros, or $26.8 billion, in shareholder equity.

A spokeswoman for the bank said that a team of “around six traders” from the proprietary desk was responsible for the trades, and they no longer worked for the bank. She said she did not know whether they would face legal charges

hnair · Post by **hnair** » 17 Oct 2008 22:35

Singha, it is not just money. As they always did in history, they can always buy out a sheikh or a mullah and then loot any ME country's wealth at will. And to make matters interesting, the loud mouthed Ahmedinejad has gone silent too. But nowadays, there seems to be a palpable fear that the west's own predictions of challenges to their global dominance by 2050 might have been a bit underestimated. They are attempting to manage this threat in their own terms, when the going is still not that bad. Especially with a western propped PLA/CCP at the helm of one of the entities - one never knows when the chinese people will start demanding more power from their rulers.

India's super-cautious "reforms" (despite years of utilization of

"whine energy" by Indian angrez media about "tardy Fin Ministers") makes a lot of sense to the west now, I would think. Never even dreamed about this sort of things happening in my lifetime. Allah moves in mysterious ways indeed

mayurav · Post by **mayurav** » 17 Oct 2008 23:57

How to manage an imperial decline
By Aziz Huq

http://www.atimes.com/atimes/Middle_East/JJ18Ak03.html

Do empires end with a bang, a whimper, or the sibilant hiss of financial deflation?

We may be about to find out. Right now, in the midst of the financial whirlwind, it's been hard in the United States to see much past the moment. Yet the ongoing economic meltdown has raised a range of non-financial issues of great importance for our future. Uncertainty and anxiety about the prospects for global financial markets - given the present liquidity crunch - have left little space for serious consideration of issues of American global power and influence.

ramana · Post by **ramana** » 18 Oct 2008 03:04

published in Deccan Chronicle, 18 Oct., 2008

Don’t wait for the robins, just buy equities
By Warren E. Buffett

The financial world is a mess, both in the United States and abroad. Its problems, moreover, have been leaking into the general economy, and the leaks are now turning into a gusher. In the near term, unemployment will rise, business activity will falter and headlines will continue to be scary.

So... I’ve been buying American stocks. This is my personal account I’m talking about, in which I previously owned nothing but United States government bonds. (This description leaves aside my Berkshire Hathaway holdings, which are all committed to philanthropy.) If prices keep looking attractive, my non-Berkshire net worth will soon be 100 per cent in United States equities.

Why?

A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful. And most certainly, fear is now widespread, gripping even seasoned investors. To be sure, investors are right to be wary of highly leveraged entities or businesses in weak competitive positions. But fears regarding the long-term prosperity of the nation’s many sound companies make no sense. These businesses will indeed suffer earnings hiccups, as they always have. But most major companies will be setting new profit records 5, 10 and 20 years from now.

Let me be clear on one point: I can’t predict the short-term movements of the stock market. I haven’t the faintest idea as to whether stocks will be higher or lower a month — or a year — from now. What is likely, however, is that the market will move higher, perhaps substantially so, well before either sentiment or the economy turns up. So if you wait for the robins, spring will be over.

A little history here: During the Depression, the Dow hit its low, 41, on July 8, 1932. Economic conditions, though, kept deteriorating until Franklin D. Roosevelt took office in March 1933. By that time, the market had already advanced 30 per cent. Or think back to the early days of World War II, when things were going badly for the United States in Europe and the Pacific. The market hit bottom in April 1942, well before Allied fortunes turned. Again, in the early 1980s, the time to buy stocks was when inflation raged and the economy was in the tank. In short, bad news is an investor’s best friend. It lets you buy a slice of America’s future at a marked-down price.

Over the long term, the stock market news will be good. In the 20th century, the United States endured two world wars and other traumatic and expensive military conflicts; the Depression; a dozen or so recessions and financial panics; oil shocks; a flu epidemic; and the resignation of a disgraced President. Yet the Dow rose from 66 to 11,497.

You might think it would have been impossible for an investor to lose money during a century marked by such an extraordinary gain. But some investors did. The hapless ones bought stocks only when they felt comfort in doing so and then proceeded to sell when the headlines made them queasy.

Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value. Indeed, the policies that government will follow in its efforts to alleviate the current crisis will probably prove inflationary and therefore accelerate declines in the real value of cash accounts.

Equities will almost certainly outperform cash over the next decade, probably by a substantial degree. Those investors who cling now to cash are betting they can efficiently time their move away from it later. In waiting for the comfort of good news, they are ignoring Wayne Gretzky’s advice: "I skate to where the puck is going to be, not to where it has been".

I don’t like to opine on the stock market, and again I emphasise that I have no idea what the market will do in the short term. Nevertheless, I’ll follow the lead of a restaurant that opened in an empty bank building and then advertised: "Put your mouth where your money was". Today my money and my mouth both say equities.

Warren E. Buffett is the chief executive of Berkshire Hathaway, a diversified holding company

Satya_anveshi · Post by **Satya_anveshi** » 18 Oct 2008 03:15

Neshant wrote:looks like rules of the game are about to be rewritten. we have been invited to dine at the high table. hopefully they won't stick us with the bill.

Any high table where you are invited, it means that you have HUGE stakes in it, which means you will not only pay your bill but at times will have to sponsor the change initiative.
Some people are making it like the current crisis is between EU and US but for me it just does not make sense.

Mr Venkatesh (?) lecture which was posted here before that the US is a sub-prime borrower for Asian (and Russian) money and the credit worthyness is questioned. They have taken concrete actions towards the same and for which US had to act.

With their act, which Warren Buffet linked it to financial pearl harbor, I am pretty darn sure some country's will be lynched by US's hitmen (whom I earlier thought were point their guns towards their own pelvic regions).

At the end of this mess, mark my words, US will own more of the world than they are owning now.

Here is Indian reaction to this: Our FM has doubled the extent of foreign investment in Indian company to $6 billion and it will have impact.

Neshant · Post by **Neshant** » 18 Oct 2008 06:33

Don’t wait for the robins, just buy equities
By Warren E. Buffett

Warren buffet bought billions of dollars of goldman sachs stocks with a 10% discount coupon. Then he started yelling for the govt to use taxpayer's money to bail Goldman Sachs out.

He's a crook.

He probably bought a ton of other stocks just before the market crashed. Now he's hollering to the public to put their money in. See the pattern? He'll be unloading his stocks just as soon as the public rushes in.

Don't invest a thing in the market until you see a sustained recovery. Anything else is just a dead cat bounce.

svinayak · Post by **svinayak** » 18 Oct 2008 07:13

Wall Street historian Charles Geisst is quoted as saying, "I understand the sentiment, but this situation is unlike anything we've seen since 1932. In downturns such as 1987 and early this decade, we never had a real clear view of what caused markets to go down. In this case, we have much too clear a view. This is the first time we've seen systemic problems affect the markets since the Great Depression."

Reaction on CNBC was mixed. Several guests gave Buffett's "buy" call a strong endorsement.

Others agree that stocks will indeed be higher years from now, but fretted about potential near-term losses. We also heard how many money managers don't have the luxury to wait for years to turn a profit. Their clients and employers demand results now, not later.

MARKETWATCH FIRST TAKE
Applying the Buffett doctrine
By MarketWatch
Last update: 3:20 p.m. EDT Oct. 17, 2008

NEW YORK (MarketWatch) -- If Warren Buffett is buying stocks, should you?
The answer, unequivocally, is yes. That is, if you can get Warren's terms. And even if you can get those sweet deals, be careful.

Those are the warnings investors should heed after Buffett's now infamous commentary was published in the New York Times on Friday, "Buy American. I Am." Judging by the market's response -- the Dow Jones Industrial Average (INDU:
INDU
INDU, , ) was up nearly 3% in afternoon trading -- investors are following America's most famous investor. See Buffett commentary.

But those same investors should be careful. It's not that Buffett isn't smart, he is. But at this stage of the game, Warren Buffett doesn't buy stocks on the open market by calling his broker, he buys them in bulk.
For instance, he didn't just go out and buy battered shares of General Electric Co. (GE:
General Electric Company on the open market Oct. 1. He also received $3 billion in special, preferred stock. Those shares will pay a 10% dividend for at least three years and if, after that, GE wants to buy it back they will have to pay him 10%. Buffett also got warrants to buy GE stock that at the time was worth a 13% discount to existing shares.

The same principle applied with his investment in Goldman Sachs Group Inc. (GS:
GS, , ) just a week earlier. Buffett again bought $5 billion in preferred stock. He'll get the same 10% dividend and $5 billion in warrants at $115.
The problem for Buffett is that his warrants were becoming worthless as GE and Goldman stock fell. One cheap, easy way for Buffett to reverse his losses is by penning an editorial using his huge sway, folksy style, and hints of patriotism to stir up some buying.
Buffett made the point that he's using his personal account to buy stocks. That may be true and his heart may be in the right place, but it's also true that Buffett's fame, success and fortune ride with his investment company Berkshire Hathaway (BRKA:
not his personal account

Investors should, in the end, be mindful of Buffett's advice, "Be fearful when others are greedy, and be greedy when others are fearful."
And when the "others" are investors driving very greedy sweetheart deals?
Wait until you can get your own.

Singha · Post by **Singha** » 18 Oct 2008 10:32

a while back harvard was boasting of its X billion$ endowment and staff hiring
was being given blank cheques to hire the best at any price. I wonder how
their value sits now?

smaller state run univs will hurt first. the han-std showpiece multi million$$ gyms,
pools and luxury dorm suites with jacuzzis and plasma TVs might need to be
scaled back.

NYT

Rising Criticism as Rutgers Invests in Athletics

By KATIE THOMAS
Published: October 17, 2008

NEW BRUNSWICK, N.J. — Ask students like Usha Persaud about the Rutgers football team, and they do not talk about its weak offense or whether the Scarlet Knights have a chance against Connecticut in Saturday’s homecoming game.

An 11-2 season in 2006 under Coach Greg Schiano, top right, prompted Rutgers to undertake a $102 million stadium renovation, which may now have to be scaled back because of the poor economy and anemic private donations.

Instead, Persaud brings up the campus buses, on which it is harder than ever to get a seat. Or the microphones in the lecture halls, which malfunction so frequently that Persaud and her friend Sushant Bandarpalle have taken to sitting up front to hear their professors. And did she mention that tuition went up?

Fair or not, Persaud and several other students said that they could not help but link their own hardships to news that the state university planned to move ahead with $102 million in football stadium renovations or that the athletic department received more than $2 million in state earmarks when overall financing to Rutgers was being cut.

“I think it’s ridiculous, because there are so many more things they could be spending their money on, like technology in the classroom,” said Persaud, a junior majoring in biology and psychology. “Or more buses.”

renukb · Post by **renukb** » 18 Oct 2008 10:34

Saving What Can Still Be Saved
The global financial crisis has also started to hit countries once thought to be immune from it, like China, Russia and the Gulf States. The International Monetary Fund believes the worst is yet to come.

http://www.spiegel.de/international/wor ... 01,00.html

The crisis has unleashed a political revolution that is sending shock waves around the globe. With its economy weakened, the rate of the US's relative decline as a superpower is accelerating as the country gradually loses its dominant position. Should China, India and Russia emerge from the global crisis relatively unscathed, the center of the world economy will in fact shift to the East in the 21st century. Asia will become synonymous with growth and the West with debt.

vsudhir · Post by **vsudhir** » 18 Oct 2008 16:02

a while back harvard was boasting of its X billion$ endowment and staff hiring
was being given blank cheques to hire the best at any price. I wonder how
their value sits now?

smaller state run univs will hurt first. the han-std showpiece multi million$$ gyms,
pools and luxury dorm suites with jacuzzis and plasma TVs might need to be
scaled back.

I closely follow the academic recruitment mkt due to my line of work.
Usually the acad mkt is decoupled of sorts from the general industry mkt, but these aren't usual times.

Due to the mkts tanking, univ endowments - the base for univ budgets - are severaly hit as investments in both debt and equity have simultaneously fallen. Result? Acad position openings at even well-off pvt univs have been hit.

Public univs are in a deeper hole. Budgetary support frm states was always tight but now, with the credit crunch essentially meaning that even state and city govts are having trouble raising money from the mkts (e.g., Calif might have to default on paying teachers' salaries this month-end because there's nobody willing and liquid enough to lend at this time). Many acad positions that were open till as late as mid-aug found their budgets miraculously disappear since then.

So yes, these aren't goo times tobe on the job mkt, whether one is a bachelor's/master's degree holder or a PhD.

JMTs etc.

fanne · Post by **fanne** » 18 Oct 2008 17:12

Well I listen to the local Indian channel in US (yes they have something like that in NJ), anyway the channel is up until evening, then at same dial some whacko comes up. To hear him (as in white supremacist uvacha) is entertaining. But on the day of the last debate, he said these words, sort of, that the current economy is being bailed out by Goldman Sachs guys (Fed chair and everyone else that counts), no wonder, GS is kind of last man standing. He said that the current economy, nay country or the world, is being run by GS people and committee of foreign affairs (or something like that), and they are the same people. There is serious conflict of interest and much more going on than what meets the eye. Take it FWIW

Singha · Post by **Singha** » 18 Oct 2008 17:54

must be a version of the "jewish world govt" conspiracy theory. surely the rothschilds and bilderberg group
are also fitted into the plot somewhere.

I believe many towns are insolvent and would default on their municipal bond obligations. inshallah garbage
collection would be 'reduced' and filthy packs of stray dogs yelp and bark at passersby walking along to
save petrol - as in bengalooru.

as the good Lord said - ultimately black, white and yellow will converge to brown

Satya_anveshi · Post by **Satya_anveshi** » 18 Oct 2008 21:02

Bush's statement:

>>>"As a strong believer in free markets, I would oppose such measures under ordinary circumstances," the president said. "But these are no ordinary circumstances. Had the government not acted, the hole in our financial system would have grown larger, families and businesses would have had an even tougher time getting loans and ultimately the government would have been forced to respond with even more drastic and costly measures later on."

I think the foreign ownership of US financial institutions by means of SWFs has got Washington mighty pi$$ed. Govt ownership with veto power means no such sale, capital injection means continuation of the leisez faire but the question is who will fund that going forward? BAM the solution: Make a huge mess of credit crisis, shrink the reserves of foreign countries and there by US debt, make the WW markets fall, own a better part of that. The focus of this strategy will surely be Russia, China, India and may be Japan.

Neshant · Post by **Neshant** » 19 Oct 2008 04:54

US is holding out the threat of economic hardship against Pakistan by refusing them a $$ bailout.

US has abandoned their previous strategy of paying good money for cooperation in eliminating jehadists. They got taken for a ride on that one.

Either Pakistan will clean up its act and hand over mullah omar and other bigwigs by Christmas to the crusaders, or they will be economically ruined.

Neshant · Post by **Neshant** » 19 Oct 2008 05:50

France wants a new financial world order with US at the sidelines rather than in the middle. Hence they wanted all major countries to meet and decide on this new order. They wanted some backup which is why they invited India & China.

US will not have any of it. They want to keep the world financial order as status quo with themselves and USD as top dog.

The US has now hijacked the idea of a meeting (originally by France & Germany) to discuss the new world financial order. Nothing of substance will come out of it as a result.

It will be interesting to see what plays out in the days ahead. Babuz better not be asleep at the wheel.

Satya_anveshi · Post by **Satya_anveshi** » 19 Oct 2008 09:49

Neshant wrote:Babuz better not be asleep at the wheel.

This is not just about babuz but a huge decision time for politicos. It seems that the time table is being dictated by US and we should do our best to be not dictated by it.

Second, there seems to be an high agreement on continuation of democratic capitalism, whatever the heck it means.

I say, we just sit back for now at least for 3-6 months and involve in the mother of all chai-biscoot sessions at the high table, yes we need to be there but ensure the summit benefits us in both long and short run. First, let China and Russia drift further before we can extend our hand of friendship to them and work to drift US's economic and military status. But I think it is all a done deal as far as India is concerned, perhaps we need to connect the dots with our UICNA

Satya_anveshi · Post by **Satya_anveshi** » 19 Oct 2008 09:53

IMF's cheif is being implicated in similar situation as that of Elliot Spitzer at this critical juncture. Seemingly an unrelated fiasco but I suspect it is step towards ensuring US stronghold over critical institutions.

pradeepe · Post by **pradeepe** » 19 Oct 2008 10:11

IF France wants to yell about the death of the US financial power house, then uncle will not so gently remind it that the rumors of its death are highly exaggerated. Keep in mind, while considerably weakened, it wrests its power in being able to formulate the rules. The dominant powers always do. Very unlikely that France will actually think of placing US at the sidelines. More likely it wants a bigger say in how the rules are written. And like the typical small guy egging on everyone to take on the bully, is trying to get numbers on its side.

Neshant · Post by **Neshant** » 19 Oct 2008 12:23

US has already stolen their thunder by hosting the meeting and by making it clear that they will set the agenda. I'm sure however that the majority of countries at the meeting are not pleased that things will go on as they have.

---

Bush will host world leaders at economic summit

CAMP DAVID, Md. – President Bush, looking for answers to an global economic emergency with just three months left in office, will host an international summit to discuss ways to fix the world financial system but warned on Saturday against reforms that threaten capitalism.

Bush has backed the steps European nations have taken to fix the financial markets and is willing to listen to a range of ideas from both developed and developing nations, but he hasn't signed on to the more ambitious, broad-stroke reforms that some European leaders have in mind to avoid a repeat of the market crisis that rippled around the globe.

Sarkozy has floated the idea of reforming rating agencies and even exploring the future of currency systems. British Prime Minister Gordon Brown, who engineered a British bank bailout that inspired U.S. and European rescues, is proposing radical changes to the global capitalist system, including a cross-border mechanism to monitor the world's 30 biggest financial institutions.

Sarkozy also stressed the urgency of what he said was a "worldwide crisis" that demands a "worldwide solution."

He said he agreed with Bush's view that reforms not challenge the foundations of market economics. But he added: "We cannot continue along the same lines because the same problems will trigger the same disasters."

He said hedge funds and tax havens cannot continue to operate as they have in the past; financial institutions cannot continue without supervisory control.

"This is no longer acceptable," Sarkozy said. "This is no longer possible. ... This sort of capitalism is a betrayal of the sort of capitalism we believe in."

http://news.yahoo.com/s/ap/20081019/ap_ ... tdown_bush

Neshant · Post by **Neshant** » 19 Oct 2008 14:06

To get the IMF loans moving, they are stepping up the airstrikes and publicing it.

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

Pakistan officials: Air strikes kill 30 militants

http://news.yahoo.com/s/ap/20081019/ap_ ... n_violence

svinayak · Post by **svinayak** » 20 Oct 2008 01:09

The Guys From ‘Government Sachs’

By JULIE CRESWELL and BEN WHITE
Published: October 17, 2008

THIS summer, when the Treasury secretary, Henry M. Paulson Jr., sought help navigating the Wall Street meltdown, he turned to his old firm, Goldman Sachs, snagging a handful of former bankers and other experts in corporate restructurings.

In September, after the government bailed out the American International Group, the faltering insurance giant-a Rockefeller group, for $85 billion, Mr. Paulson helped select a director from Goldman’s own board to lead A.I.G.

And earlier this month, when Mr. Paulson needed someone to oversee the government’s proposed $700 billion bailout fund, he again recruited someone with a Goldman pedigree, giving the post to a 35-year-old former investment banker who, before coming to the Treasury Department, had little background in housing finance.

Indeed, Goldman’s presence in the department and around the federal response to the financial crisis is so ubiquitous that other bankers and competitors have given the star-studded firm a new nickname: Government Sachs.

The power and influence that Goldman wields at the nexus of politics and finance is no accident. Long regarded as the savviest and most admired firm among the ranks — now decimated — of Wall Street investment banks, it has a history and culture of encouraging its partners to take leadership roles in public service.

It is a widely held view within the bank that no matter how much money you pile up, you are not a true Goldman star until you make your mark in the political sphere. While Goldman sees this as little more than giving back to the financial world, outside executives and analysts wonder about potential conflicts of interest presented by the firm’s unique perch.

They note that decisions that Mr. Paulson and other Goldman alumni make at Treasury directly affect the firm’s own fortunes. They also question why Goldman, which with other firms may have helped fuel the financial crisis through the use of exotic securities, has such a strong hand in trying to resolve the problem.

The very scale of the financial calamity and the historic government response to it have spawned a host of other questions about Goldman’s role.

Analysts wonder why Mr. Paulson hasn’t hired more individuals from other banks to limit the appearance that the Treasury Department has become a de facto Goldman division. Others ask whose interests Mr. Paulson and his coterie of former Goldman executives have in mind: those overseeing tottering financial services firms, or average homeowners squeezed by the crisis?

Still others question whether Goldman alumni leading the federal bailout have the breadth and depth of experience needed to tackle financial problems of such complexity — and whether Mr. Paulson has cast his net widely enough to ensure that innovative responses are pursued.

“He’s brought on people who have the same life experiences and ideologies as he does,” said William K. Black, an associate professor of law and economics at the University of Missouri and counsel to the Federal Home Loan Bank Board during the savings and loan crisis of the 1980s. “These people were trained by Paulson, evaluated by Paulson so their mind-set is not just shaped in generalized group think — it’s specific Paulson group think.”

Not so fast, say Goldman’s supporters. They vehemently dismiss suggestions that Mr. Paulson’s team would elevate Goldman’s interests above those of other banks, homeowners and taxpayers. Such chatter, they say, is a paranoid theory peddled, almost always anonymously, by less successful rivals. Just add black helicopters, they joke.

“There is no conspiracy,” said Donald C. Langevoort, a law professor at Georgetown University. “Clearly if time were not a problem, you would have a committee of independent people vetting all of the potential conflicts, responding to questions whether someone ought to be involved with a particular aspect or project or not because of relationships with a former firm — but those things do take time and can’t be imposed in an emergency situation.”

In fact, Goldman’s admirers say, the firm’s ranks should be praised, not criticized, for taking a leadership role in the crisis.

“There are people at Goldman Sachs making no money, living at hotels, trying to save the financial world,” said Jes Staley, the head of JPMorgan Chase’s asset management division. “To indict Goldman Sachs for the people helping out Washington is wrong.”

Goldman concurs. “We’re proud of our alumni, but frankly, when they work in the public sector, their presence is more of a negative than a positive for us in terms of winning business,” said Lucas Van Praag, a spokesman for Goldman. “There is no mileage for them in giving Goldman Sachs the corporate equivalent of most-favored-nation status.”

MR. PAULSON himself landed atop Treasury because of a Goldman tie. Joshua B. Bolten, a former Goldman executive and President Bush’s chief of staff, helped recruit him to the post in 2006.

Some analysts say that given the pressures Mr. Paulson faced creating a SWAT team to address the financial crisis, it was only natural for him to turn to his former firm for a capable battery.

And if there is one thing Goldman has, it is an imposing army of top-of-their-class, up-before-dawn über-achievers. The most prominent former Goldman banker now working for Mr. Paulson at Treasury is also perhaps the most unlikely.

Joshua B. Bolten, top, a former Goldman executive, is President Bush’s chief of staff. Stephen Friedman, a former chairman of Goldman, is chairman of the New York Fed. This fall, as part of its bailout, the government put Edward M. Liddy, then a Goldman director, in charge of A.I.G.

Neel T. Kashkari arrived in Washington in 2006 after spending two years as a low-level technology investment banker for Goldman in San Francisco, where he advised start-up computer security companies. Before joining Goldman, Mr. Kashkari, who has two engineering degrees in addition to an M.B.A. from the Wharton School of the University of Pennsylvania, worked on satellite projects for TRW, the space company that now belongs to Northrop Grumman.

He was originally appointed to oversee a $700 billion fund that Mr. Paulson orchestrated to buy toxic and complex bank assets, but the role evolved as his boss decided to invest taxpayer money directly in troubled financial institutions.

Mr. Kashkari, who met Mr. Paulson only briefly before going to the Treasury Department, is also in charge of selecting the staff to run the bailout program. One of his early picks was Reuben Jeffrey, a former Goldman executive, to serve as interim chief investment officer.

Mr. Kashkari is considered highly intelligent and talented. He has also been Mr. Paulson’s right-hand man — and constant public shadow — during the financial crisis.

He played a main role in the emergency sale of Bear Stearns to JPMorgan Chase in March, sitting in a Park Avenue conference room as details of the acquisition were hammered out. He often exited the room to funnel information to Mr. Paulson about the progress.

Despite Mr. Kashkari’s talents in deal-making, there are widespread questions about whether he has the experience or expertise to manage such a project.

“Mr. Kashkari may be the most brilliant, talented person in the United States, but the optics of putting a 35-year-old Paulson protégé in charge of what, at least at one point, was supposed to be the most important part of the recovery effort are just very damaging,” said Michael Greenberger, a University of Maryland law professor and a former senior official with the Commodity Futures Trading Commission.

“The American people are fed up with Wall Street, and there are plenty of people around who could have been brought in here to offer broader judgment on these problems,” Mr. Greenberger added. “All wisdom about financial matters does not reside on Wall Street.”

Mr. Kashkari won’t directly manage the bailout fund. More than 200 firms submitted bids to oversee pieces of the program, and Treasury has winnowed the list to fewer than 10 and could announce the results as early as this week. Goldman submitted a bid but offered to provide its services gratis.

While Mr. Kashkari is playing a prominent public role, other Goldman alumni dominate Mr. Paulson’s inner sanctum.

The A-team includes Dan Jester, a former strategic officer for Goldman who has been involved in most of Treasury’s recent initiatives, especially the government takeover of the mortgage giants Fannie Mae and Freddie Mac. Mr. Jester has also been central to the effort to inject capital into banks, a list that includes Goldman.

Another central player is Steve Shafran, who grew close to Mr. Paulson in the 1990s while working in Goldman’s private equity business in Asia. Initially focused on student loan problems, Mr. Shafran quickly became involved in Treasury’s initiative to guarantee money market funds, among other things.

Mr. Shafran, who retired from Goldman in 2000, had settled with his family in Ketchum, Idaho, where he joined the city council. Baird Gourlay, the council president, said he had spoken a couple of times with Mr. Shafran since he returned to Washington last year.

“He was initially working on the student loan part of the problem,” Mr. Gourlay said. “But as things started falling apart, he said Paulson was relying on him more and more.”

The Treasury Department said Mr. Shafran and the other former Goldman executives were unavailable for comment.

Other prominent former Goldman executives now at Treasury include Kendrick R. Wilson III, a seasoned adviser to chief executives of the nation’s biggest banks. Mr. Wilson, an unpaid adviser, mainly spends his time working his ample contact list of bank chiefs to apprise them of possible Treasury plans and gauge reaction.

Another Goldman veteran, Edward C. Forst, served briefly as an adviser to Mr. Paulson on setting up the bailout fund but has since left to return to his post as executive vice president of Harvard. Robert K. Steel, a former vice chairman at Goldman, was tapped to look at ways to shore up Fannie Mae and Freddie Mac. Mr. Steel left Treasury to become chief executive of Wachovia this summer before the government took over the entities.

Treasury officials acknowledge that former Goldman executives have played an enormous role in responding to the current crisis. But they also note that many other top Treasury Department officials with no ties to Goldman are doing significant work, often without notice. This group includes David G. Nason, a senior adviser to Mr. Paulson and a former Securities and Exchange Commission official.

Robert F. Hoyt, general counsel at Treasury, has also worked around the clock in recent weeks to make sure the department’s unprecedented moves pass legal muster. Michele Davis is a Capitol Hill veteran and Treasury policy director. None of them are Goldmanites.

“Secretary Paulson has a deep bench of seasoned financial policy experts with varied experience,” said Jennifer Zuccarelli, a spokeswoman for the Treasury. “Bringing additional expertise to bear at times like these is clearly in the taxpayers’ and the U.S. economy’s best interests.”

While many Wall Streeters have made the trek to Washington, there is no question that the axis of power at the Treasury Department tilts toward Goldman. That has led some to assume that the interests of the bank, and Wall Street more broadly, are the first priority. There is also the question of whether the department’s actions benefit the personal finances of the former Goldman executives and their friends.

“To the extent that they have a portfolio or blind trust that holds Goldman Sachs stock, they have conflicts,” said James K. Galbraith, a professor of government and business relations at the University of Texas. “To the extent that they have ties and alumni loyalty or friendships with people that are still there, they have potential conflicts.”

Mr. Paulson, Mr. Kashkari and Mr. Shafran no longer own any Goldman shares. It is unclear whether Mr. Jester or Mr. Wilson does because, according to the Treasury Department, they were hired as contractors and are not required to disclose their financial holdings.

For every naysayer, meanwhile, there is also a Goldman defender who says the bank’s alumni are doing what they have done since the days when Sidney Weinberg ran the bank in the 1930s and urged his bankers to give generously to charities and volunteer for public service.

“I give Hank credit for attracting so many talented people. None of these guys need to do this,” said Barry Volpert, a managing director at Crestview Partners and a former co-chief operating officer of Goldman’s private equity business. “They’re not getting paid. They’re killing themselves. They haven’t seen their families for months. The idea that there’s some sort of cabal or conflict here is nonsense.”

In fact, say some Goldman executives, the perception of a conflict of interest has actually cost them opportunities in the crisis. For instance, Goldman wasn’t allowed to examine the books of Bear Stearns when regulators were orchestrating an emergency sale of the faltering investment bank.

THIS summer, as he fought for the survival of Lehman Brothers, Richard S. Fuld Jr., its chief executive, made a final plea to regulators to turn his investment bank into a bank holding company, which would allow it to receive constant access to federal funding.

Timothy F. Geithner, the president of the Federal Reserve Bank of New York, told him no, according to a former Lehman executive who requested anonymity because of continuing investigations of the firm’s demise. Its options exhausted, Lehman filed for bankruptcy in mid-September.

One week later, Goldman and Morgan Stanley were designated bank holding companies.

“That was our idea three months ago, and they wouldn’t let us do it,” said a former senior Lehman executive who requested anonymity because he was not authorized to comment publicly. “But when Goldman got in trouble, they did it right away. No one could believe it.”

The New York Fed, which declined to comment, has become, after Treasury, the favorite target for Goldman conspiracy theorists. As the most powerful regional member of the Federal Reserve system, and based in the nation’s financial capital, it has been a driving force in efforts to shore up the flailing financial system.

Mr. Geithner, 47, played a pivotal role in the decision to let Lehman die and to bail out A.I.G. A 20-year public servant, he has never worked in the financial sector. Some analysts say that has left him reliant on Wall Street chiefs to guide his thinking and that Goldman alumni have figured prominently in his ascent.

After working at the New York consulting firm Kissinger Associates, Mr. Geithner landed at the Treasury Department in 1988, eventually catching the eye of Robert E. Rubin, Goldman’s former co-chairman. Mr. Rubin, who became Treasury secretary in 1995, kept Mr. Geithner at his side through several international meltdowns, including the Russian credit crisis in the late 1990s.

Mr. Rubin, now senior counselor at Citigroup, declined to comment.

A few years later, in 2003, Mr. Geithner was named president of the New York Fed. Leading the search committee was Pete G. Peterson, the former head of Lehman Brothers and the senior chairman of the private equity firm Blackstone. Among those on an outside advisory committee were the former Fed chairman Paul A. Volcker; the former A.I.G. chief executive Maurice R. Greenberg; and John C. Whitehead, a former co-chairman of Goldman.

The board of the New York Fed is led by Stephen Friedman, a former chairman of Goldman. He is a “Class C” director, meaning that he was appointed by the board to represent the public.

Mr. Friedman, who wears many hats, including that of chairman of the President’s Foreign Intelligence Advisory Board, did not return calls for comment.

During his tenure, Mr. Geithner has turned to Goldman in filling important positions or to handle special projects. He hired a former Goldman economist, William C. Dudley, to oversee the New York Fed unit that buys and sells government securities. He also tapped E. Gerald Corrigan, a well-regarded Goldman managing director and former New York Fed president, to reconvene a group to analyze risk on Wall Street.

Some people say that all of these Goldman ties to the New York Fed are simply too close for comfort. “It’s grotesque,” said Christopher Whalen, a managing partner at Institutional Risk Analytics and a critic of the Fed. “And it’s done without apology.”

A person familiar with Mr. Geithner’s thinking who was not authorized to speak publicly said that there was “no secret handshake” between the New York Fed and Goldman, describing such speculation as a conspiracy theory.

Furthermore, others say, it makes sense that Goldman would have a presence in organizations like the New York Fed.

“This is a very small, close-knit world. The fact that all of the major financial services firms, investment banking firms are in New York City means that when work is to be done, you’re going to be dealing with one of these guys,” said Mr. Langevoort at Georgetown. “The work of selecting the head of the New York Fed or a blue-ribbon commission — any of that sort of work — is going to involve a standard cast of characters.”

Being inside may not curry special favor anyway, some people note. Even though Mr. Fuld served on the board of the New York Fed, his proximity to federal power didn’t spare Lehman from bankruptcy.

But when bankruptcy loomed for A.I.G. — a collapse regulators feared would take down the entire financial system — federal officials found themselves once again turning to someone who had a Goldman connection. Once the government decided to grant A.I.G., the largest insurance company, an $85 billion lifeline (which has since grown to about $122 billion) to prevent a collapse, regulators, including Mr. Paulson and Mr. Geithner, wanted new executive blood at the top.

They picked Edward M. Liddy, the former C.E.O. of the insurer Allstate. Mr. Liddy had been a Goldman director since 2003 — he resigned after taking the A.I.G. job — and was chairman of the audit committee. (Another former Goldman executive, Suzanne Nora Johnson, was named to the A.I.G. board this summer.)

Like many Wall Street firms, Goldman also had financial ties to A.I.G. It was the insurer’s largest trading partner, with exposure to $20 billion in credit derivatives, and could have faced losses had A.I.G. collapsed. Goldman has said repeatedly that its exposure to A.I.G. was “immaterial” and that the $20 billion was hedged so completely that it would have insulated the firm from significant losses.

As the financial crisis has taken on a more global cast in recent weeks, Mr. Paulson has sat across the table from former Goldman colleagues, including Robert B. Zoellick, now president of the World Bank; Mario Draghi, president of the international group of regulators called the Financial Stability Forum; and Mark J. Carney, the governor of the Bank of Canada.

BUT Mr. Paulson’s home team is still what draws the most scrutiny.

“Paulson put Goldman people into these positions at Treasury because these are the people he knows and there are no constraints on him not to do so,” Mr. Whalen says. “The appearance of conflict of interest is everywhere, and that used to be enough. However, we’ve decided to dispense with the basic principles of checks and balances and our ethical standards in times of crisis.”

Ultimately, analysts say, the actions of Mr. Paulson and his alumni club may come under more study.

“I suspect the conduct of Goldman Sachs and other bankers in the rescue will be a background theme, if not a highlighted theme, as Congress decides how much regulation, how much control and frankly, how punitive to be with respect to the financial services industry,” said Mr. Langevoort at Georgetown. “The settling up is going to come in Congress next spring.”

http://www.nytimes.com/2008/10/19/busin ... =cse&scp=1

svinayak · Post by **svinayak** » 20 Oct 2008 07:07

http://www.bloomberg.com/apps/news?pid= ... refer=home
Losing Las Vegas Shows How Americans Crap Out in Housing Casino

Las Vegas leads the nation in falling home prices, foreclosures and stalled construction projects. Rick's Cabaret International Inc., with 20 clubs in seven states and two in Buenos Aires, has lost 74 percent of its market value this year.

The ``main nerve'' of the American dream runs through this desert metropolis, Hunter S. Thompson concluded in his 1971 book, ``Fear and Loathing in Las Vegas.'' Chopra, the spiritual teacher whose writings Sogoloff has turned to, said that less than 2 percent of the $3 trillion to $4 trillion that circulates in the world's markets daily is used for goods and services.

`Pure Speculation'

``The rest is trying to make money off money,'' said Chopra, adjunct professor at Northwestern University's Kellogg School of Management in Evanston, Illinois. ``Our financial structure which, of course, is an American system but is now global, is pure speculation. It's gambling.''

More than $10 billion of hotel and casino projects with 10,000 rooms have been delayed on Las Vegas Boulevard, better known the world over as the Strip, according to locally based real estate and economic consulting firm Applied Analysis LLC.

Gaming revenue for casinos on the Strip fell for the eighth straight month in August from a year earlier, the longest streak of declines since records began in 1983, according to the Nevada Gaming Control Board in Carson City. The 16 percent drop in May was a record. August revenue fell 7.4 percent.

``The only comparable period was around 9/11, when we were down for five straight months,'' Frank Streshley, senior analyst at the board, said in an interview. ``This is a very difficult time for the gaming industry.''

Vegas workers may see their pay continue to shrink as tourists, turned off by the casino-style wagers they placed on their homes and retirement funds, stay away, said Faith Popcorn, who tracks cultural trends and spending habits as chairman of New York-based Faith Popcorn's BrainReserve. ``When we talk about gambling, that's a word we don't want in our vocabulary.''

Neshant · Post by **Neshant** » 20 Oct 2008 13:31

Deleted

Neshant · Post by **Neshant** » 20 Oct 2008 23:12

EU trying to push the idea of a world wide currency to replace the US dollar. If true, the US will surely resist it strongly :

New World Currency :
http://www.youtube.com/watch?v=wFs99zBTRO0&NR=1

France President firing away :
http://www.youtube.com/watch?v=u6TrAgL72OQ

No way US is going to let that guy dictate the agenda and eliminate the USD as a global currency. China wants this new world currency though since its sitting on a mountain of USD. It would not be to India's interest if a world wide currency emerges since we are not hoarders of money like the east asians.

I believe if the US does not agree to it, the EU, China, Japan and Russia will probably just go ahead and launch this alternate global currency without the US. India will surely be invited on board and US will plead with India not to join.

svinayak · Post by **svinayak** » 20 Oct 2008 23:27

Nice try guys but your too late! Russia, the Arabs, and the Chinese have beat you to it. They will be introducing a gold backed currency within the next 90 days. The U.S. and U.K. cannot do anything

Singha · Post by **Singha** » 20 Oct 2008 23:41

source?

Neshant · Post by **Neshant** » 20 Oct 2008 23:58

Yea I'd like to know the source as well. Gold backed currency? Why not just use gold itself.

Anyways, here's an interesting speech from Biden where he let slip what sounds like some important info he shouldn't have :

http://blogs.abcnews.com/politicalradar ... uppor.html

svinayak · Post by **svinayak** » 21 Oct 2008 00:02

Acharya wrote:Nice try guys but your too late! Russia, the Arabs, and the Chinese have beat you to it. They will be introducing a gold backed currency within the next 90 days. The U.S. and U.K. cannot do anything

That was the comment in the Utube

Nandu · Post by **Nandu** » 21 Oct 2008 02:08

Neshant wrote: Gold backed currency? Why not just use gold itself.

There isn't enough gold to go around, but you can, in theory, increase the actual money supply ten times, or even more, using fractional reserve, and still have the currency be gold backed.

Just a theoretical point. I am not arguing in favor of a gold standard.

CalvinH · Post by **CalvinH** » 21 Oct 2008 03:18

No way US is going to let that guy dictate the agenda and eliminate the USD as a global currency. China wants this new world currency though since its sitting on a mountain of USD. It would not be to India's interest if a world wide currency emerges since we are not hoarders of money like the east asians.

Isnt china should oppose it as if this would lead to a decline in value of their huge reserves.

Satya_anveshi · Post by **Satya_anveshi** » 21 Oct 2008 03:25

Neshant wrote:Yea I'd like to know the source as well. Gold backed currency? Why not just use gold itself.

Anyways, here's an interesting speech from Biden where he let slip what sounds like some important info he shouldn't have :

http://blogs.abcnews.com/politicalradar ... uppor.html

So, they are making a black guy bid for and fight for white man's "wealth prevention?" This definitely smacked of Pu for me all along but slowly things are emerging. Look how Bush is rolling out the "series" of world summitt meetings and incoming President is supposed to follow through. As it is, Obama will not be able to touch anything with "Financial" word in it. So much for liberal, democratic, forward looking nation.

Also, notice this, Bush got an economy that was in shambles (Clinton made a bubble our of dot com and gave it to Dubya after busting it) and Dubya is giving back even bigger pile of Pu (made a bubble out of housing/commodity and giving into Obama) to the new guy.

Neshant · Post by **Neshant** » 21 Oct 2008 03:31

Isnt china should oppose it as if this would lead to a decline in value of their huge reserves.

Their whole point is to get out of dollars and jump to something not controlled by the US but which has value. Something anchored to the value of things more tangible than an IOU from uncle. Ditto for Japan, Taiwan, South Korea, Russia, EU... just about everyone except US.

I suspect the european model of each country maintaining fisical dicipline would be enforced on all members who joined this global currency if it ever came into existance. I.e. maintain balanced budgets..etc. It would also demand transparency in all banking and financial operations and a global body to check on all members. Needless to say, it would be disasterous for uncle.

IMO its not in the interest of India.

Satya_anveshi · Post by **Satya_anveshi** » 21 Oct 2008 03:38

As with all other important issues facing important entities, both sides of the debate are controlled and real stakeholders will be sidelined with symbollic gesters of taking care of their interest. I view Sarkozy's and perhaps EU enacted drama with that perspective.

svinayak · Post by **svinayak** » 21 Oct 2008 11:39

http://digitizedrevolution.wordpress.co ... -revealed/

http://www.uaff.us/uaff_september_news_and_updates.htm

Satya_anveshi · Post by **Satya_anveshi** » 22 Oct 2008 08:07

Paulson rants

WASHINGTON: Treasury Secretary Henry Paulson said on Tuesday the current financial challenges facing America will persist for a number of months, but
he said the economy will rebound.

Paulson, speaking to an audience in New York, said that the recovery will occur because the administration, working with the Federal Reserve, is committed to taking the necessary steps to strength the financial system.

He said that close cooperation with other countries is critical and cautioned that it is important for all nations to be careful to make sure that the actions they are taking to deal with the crisis do not come at the expense of other nations.

``Our government will do what is necessary to significantly strengthen our banks and financial institutions, enabling them to increase financing for the consumption and business investments that drive U.S. economic growth,'' Paulson said in remarks to the National Committee on US-China Relations. Copies of his remarks were released in Washington.

``Through a multitude of powerful actions we have and will demonstrate our commitment to unlocking our credit markets and minimizing the impact of the current instability on the rest of the US economy,'' Paulson said.

``Although we expect current challenges to continue for a number of months, we will overcome them as we have overcome every challenge our nation has ever faced,'' Paulson said.

He said that dealing with the financial crisis required ``dramatic steps'' in the United States and close coordination with other nations. He specifically mentioned talks he has had with Chinese leaders including Vice Premier Wang Qishan, who was recently appointed to lead a newly created financial crisis committee in China.

``It is clear that China accepts its responsibility as a major world economy that will work with the United States and other partners to ensure global economic stability,'' Paulson said. China is being asked to get screwed..so far no Russia nor India in this..let's wait a few days

Paulson said he was looking forward to the next round of high-level talks with China which will take place in Beijing in December [time table is completely driven by US and they are expecting everyone to fall in line]. Paulson began the discussions, known as the Strategic Economic Dialogue, in 2006 as a way to deal with a number of trade tensions between the two nations that reflected America's soaring trade gap with China.

Paulson has expressed the hope that the next administration will continue these talks but he said Tuesday night that for this to occur, the talks must produce concrete results.

In a separate appearance Tuesday, Paulson said in an interview on the ``Charlie Rose Show'' that the government's efforts to deal with the credit crisis were working but he cautioned that the disruptions to the economy would continue to be felt for some time.

``We've got some challenging months ahead in terms of the impact of the credit crunch on the economy[this is still a puzzle],'' he said.

svinayak · Post by **svinayak** » 22 Oct 2008 11:02

Marc Faber Spreads More Gloom And Doom
Joe Weisenthal | Oct 21, 08 11:35 AM

Marc Faber: China's Lies, and the Asian Feedback Problem

We love it whenever Marc "Gloom Boom Doom" Faber (not to be confused with Dr. Doom, Nouriel Roubini) comes on CNBC to offer up his apocalyptic views on the economy. Not only are his views always thought provoking (to say the least), but his accent and mannerism are right out of Dr. Strangelove. He's chilling. A couple weeks ago, we caught him making some quasi-bullish comments on farmland, because (paraphrasing here) 'when the next war comes, the bombs will falll on city dwellers'. Who else goes on TV and talks like that? Nobody.

He was on again this morning, and his comments about a downward economic spiral almost seem reserved by his standards. Paul Kedrosky has a chunk of the transcripts:

ASIA IS THE PRODUCER FOR THE UNITED STATES, AND IT IS ALSO THE REGION THAT HAS VERY LARGE CAPITAL SPENDING. SO WHEN THERE IS A SLOWDOWN IN THE U.S., IT'S NOT GOOD FOR THE U.S., BUT IT'S BASICALLY A DISASTER FOR ASIA, AND THEN, BECAUSE OF REDUCED DEMAND IN ASIA, IT'S AN EVEN GREATER DISASTER FOR THE RESOURCE PRODUCERS OF THE WORLD: THE MIDDLE EAST, RUSSIA, BRAZIL. SO THE WHOLE WORLD GOES INTO A VICIOUS DOWNCYCLE ECONOMICALLY AND THE U.S. IS RELATIVELY BETTER OFF.

On China.....

I DON"T BELIEVE THE CHINESE ECONOMY HAS BEEN GROWING AT 9%. I THINK IT'S BEEN DEACCELERATING VERY RAPIDY.BEST ESTIMATE IS 5%. BUT THE CHINESE, THEY LEARNED ONE THING FROM THE U.S. GOVERNMENT. IT'S HOW TO DOCTOR ECONOMICS

See, we do export some things.

http://www.iie.com/publications/pb/pb04-7.pdf

vsudhir · Post by **vsudhir** » 22 Oct 2008 23:00

Schaudenfraude season in phull swing onlee amongst yamrika's class warriors.

Various aam aadmis and aam aurats crawling outta the concretework to kick the former high-flying I-bankers when they're down and out.

Young Bankers: Not Feeling Their Pain (bizweek)

I know it's not right, but there's some pleasure in watching my high-achieving former classmates squirm